Monday, November 04, 2019

10 Tips for funding a major housing repair

Home repairs in progress - Photo courtesty of Pexels
Once you reach a certain stage in your life, you begin to plan for contingencies. In your early 20s, while you are finishing a degree or starting a career, you often live paycheck to paycheck. As you grow older and build savings, earn some credit and start a family, your financial responsibility starts to grow, too -- especially once you purchase a home.

For homeowners, keeping your property healthy will be one of your top priorities. Not only is your house your family’s haven, but it’s also an investment you want to protect. Staying on top of major and minor repairs can help you stay both comfortable and secure in your investment — but it can also be costly.

Many Detroit home owners qualify for an interest-free loan to cover the cost of repairing their home provided that they meet certain income requirements or live in qualified areas of the city. Warrendale is one of those qualified area so residents of our neighborhood are eligible regardless of their income. To get the process started, homeowners need to fill out this information packet.

For those who don't live within the Detroit city limits, here are some ways to help you plan so home repairs don’t cause an unexpected blow to your savings.

  1. Start saving early and add to it often. Even if you can’t put much into savings, commit to some amount every pay period. Over time, as your salary increases or your spending habits level out, begin adding more.
  2. Take time researching the right contractors. If you know in advance who to hire, you’ll be better able to budget for major home repairs. Ask neighbors and friends for recommendations; they are more reliable than online reviews.
  3. Know what your home insurance policy covers and your deductible. Keep track of your receipts and purchases in case you need to make a claim to help with a repair. Be sure your savings account always has enough to cover the deductible.
  4. Look into taking a cash out refinance to help pay for the costs of emergency repairs. A cash for remodel option allows you to use your home equity by replacing your current mortgage with a higher-balance loan, providing you with the difference between the two to use toward repairs and improvements, like replacing a roof or installing a new HVAC unit.
  5. Tackle easy, DIY projects on your own. Minor repairs like a squeaky floorboard or a loose railing can often be fixed quickly and with simple tools. If you need instruction, there are hundreds of high quality online tutorial videos to follow.
  6. Research home loans and grants that could be available to you. If you are a veteran or are making a modification to accommodate a disability, you may be able to apply for grants or loans with a lower percentage rate.
  7. Stay on top of upkeep and maintenance. It’s easier to keep your hardwood from getting scuffed than to refinish your floors. Focus on keeping your home’s elements in top shape.
  8. Share your space. You can make extra money by renting out an extra bedroom or guest house on a site like Airbnb and VRBO. Put this side income back into your home by funding repair projects and improvements.
  9. Get warranties to cover maintenance, upkeep and damage over the years, especially on big ticket items like roofing, plumbing and appliances. 
  10. Pay off your debt. Setting a budget and working on a plan to pay off your debt will free up your income for home improvement projects. For example, some people have had success paying off credit cards quickly by transferring a balance to a card that offers 0% APR. That way you don’t wind up spending the majority of your payments in interest.

Homeowners spend an average of 1-4% of their home’s value annually on repairs. While you can’t always be prepared for every kind of repair, having a financial safety net in place will help make paying for these situations much easier.

Rarely is it one solution, but a combination of two or more can help keep repair costs manageable. Home improvement projects can make your home more appealing and enjoyable, both as a place to live and an investment to rely on.

These tips are brought to you by the Warrendale Detroit Blog as part of our Tip of the Week series. Please check back next week for more advice on your home, money, and life. In the meantime, please feel free to follow the author Frank Nemecek on Twitter and Instagram as @fnemecek for more great content. 

No comments:

Post a Comment