1 in 5 homeowners is making this costly mistake — and it could ruin their finances
Close to 20% of homeowners have no money set aside for an emergency home repair, according to a survey from HomeServe USA, a provider of home repair plans.
The cost of fixing pipes and faucets averages around $304, according to HomeAdvisor. If you’re installing asphalt shingle roofing, the average cost is $7,280.
Here’s a home improvement project nobody looks forward to: replacing a sewer line.
For homeowners, the mortgage, property taxes and insurance only account for a portion of the cost of owning an abode.
It’s those surprise emergency repairs that can destroy your budget.
More than half of participants said they had a home repair emergency in the last 12 months.
“People should be concerned about maintenance and being prepared for things to break down,” he said.
For instance, the national average cost of installing or replacing asphalt shingle roofing is $7,280, according to HomeAdvisor, a website that helps homeowners find contractors.
Failure to tackle those problems right away can lead to higher expenses.
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Depending on the severity of the problem, you might have to hire contractors to excavate your lawn or driveway to replace the line. That cost can run anywhere from $3,000 to $25,000, HomeAdvisor found.
“I think you have to understand that things break, problems happen and, if you’ve owned a home for six months or longer, you know that,” said David Mendels, a certified financial planner and director of planning at Creative Financial Concepts in New York.
“If you need a new boiler, is that really different from your car breaking down?” asked Mendels. “They’re all emergencies.”
Some experts recommend setting aside a fund just for home-related emergencies: Sock away savings equal to 1% of the home’s purchase price each year to cover ongoing maintenance, said Deborah Kearns, an analyst with Bankrate.com.
The next best option in an emergency might be to turn to a home equity line of credit, a revolving credit line that’s secured by your home.
The current average rate on a HELOC is 5.48%, according to Bankrate.com.
Borrow responsibly, and reserve the line of credit for emergencies. “I’m a fan of the HELOC if you have the discipline to not use it,” said Mendels.