Create A Home Repair Saving Account

March 6, 2019

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A recent poll found that 44% of all homeowners regret buying a home.  The number one reason for that regret is underestimating the hidden costs associated with buying and owning a home, including the ongoing responsibilities of maintaining it. Another survey found 44% of new homeowners incurred an unexpected repair cost within one year of closing. But owning a home means you will eventually need to repair and/or replace items and not being prepared can put you in the poor house.  So financial planners offer some free advice for all homeowners and that’s to save 1% to 4% of the purchase price of the home for those unexpected costs, in addition to your emergency fund. Based on the average cost of buying a home, which is $225,300, you’ll need to stash away between $2,253 and $9,012. If your home is 20 years or older, you should save more as many of the home’s equipment, appliance and building materials have reached the end of the their useful life, and you will need to replace them. That leads to the question, should you seek out properties with a home warranty or buy one yourself? Experts say for those already in a home, it is better to simply put the money you'd otherwise spend on a home warranty or a service contract into a savings account dedicated to product repair and replacement. If a home warranty is attractive to you, make sure you are clear on what the warranty covers.  For instance, many plans cover your refrigerator but not the ice maker. How you care for your appliances also matters. If you failed to perform routine maintenance or if an appliance wasn't properly installed, the home warranty provider could argue that it won't pay for repairs. Also consider the limits of the policy with some only offering a maximum as little as $10,000 for all covered items.

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SOURCE: Lifehacker

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