A home is the biggest purchase most people make in their lifetime, and it’s common for new owners to be cash-strapped for a while after moving. Sometimes, however, repairs and renovations can’t wait – and unfortunately, these surprise or emergency projects are often the most expensive. With that in mind, here are some strategies to help new homeowners gauge the urgency of projects, how to prioritize them, and how to fund needed home repairs even when cash is tight.
Use your home inspection as a repair guide
At the height of the pandemic real estate frenzy in 2020 and 2021, many buyers waived inspection contingencies in their offers, i.e. the right to inspect the property before closing. Now that things are calming down slightly, home inspections are becoming common again. Understanding an inspector’s report can be a great help in anticipating maintenance needs and potential problems.
“Knowing these details about the home you’re going to own is crucial,” says Ari Rasekh, co-founder of Manor, an app that helps homeowners track their home’s maintenance and connect with professionals and contractors.
“A good inspector will pick up on things that seemed insignificant at the time,” Rasekh says. “Casting remarks like ‘your boiler is 30 years old. Looks like it’s working, but it’s 30 years old,” may be clues to projects that will need attention – sooner rather than later.
Rasekh says keeping your inspection report handy and reviewing it from time to time after you move in is a good idea, because then you can better anticipate and budget for needed repairs to the home.
Understand what is urgent and what can wait
Not all home repairs are created equal, and some are certainly more time-sensitive than others. A door coming off its hinges or a broken window can be bothersome and ugly. But a dripping pipe, while less unsightly, may require more immediate intervention.
When checking items, focus on “the systems and devices that keep your home running smoothly. It’s best to resolve issues quickly and proactively so that small issues like a leaky pipe don’t turn into bigger issues like major damage to your floors,” says Raj Midha, senior vice president and director general warranty company American Home Shield.
Thinking about a home’s equity buildup can also be a good indicator for prioritizing repairs, Rasekh suggests. “Looking at the potential financial gain for a particular item,” Rasekh says. “Keep an eye on trends and data on what people are actually doing and using.”
However, as Midha notes, “While it can be rewarding to do superficial improvements like painting walls, redoing cabinets or replacing countertops, these cosmetic projects can usually wait and can sometimes be done as a DIY project” .
It is also important to consider any risks to your health and safety. Even small things like a broken smoke detector need to be dealt with quickly.
Consider DIY for some home repairs
Unless you are wealthy enough to have house staff, as the owner you will almost certainly be doing your own repairs at some point. It’s important to be realistic about what you should and shouldn’t discuss. “As a general rule, any repairs to major plumbing, electrical, heating or air conditioning systems should be carried out by a qualified licensed professional. In these cases, incorrect repairs can be dangerous and lead to further damage,” says Midha.
However, you may also be able to do smaller, less technical household repairs yourself – a great way to save money on home maintenance. “Examples of simpler DIY projects might include replacing the air filter in your HVAC system, unclogging a minor sink, or updating the paint,” says Midha.
|Leaky/damaged roof||Peeling paint|
|Dripping/leaking water pipes||Old devices|
|Septic tank problems||Outdated finishes|
|Faulty wiring||Rigid, drafty or cracked windows|
|Smoke/carbon monoxide detector inoperable||Sagging/warped doors|
|Defective boiler, furnace or air conditioning system||Squeaky hinges/floors|
|Evidence of termites or mold||Smart home devices|
How to finance home repairs
Many new homeowners find themselves strapped for cash once their contract is finalized, but necessary home repairs don’t wait for your finances to stabilize.
This is part of the reason why the home inspection report is so crucial. Identifying issues that need to be fixed immediately can allow you to negotiate a lower price to offset the cost of major repairs. If you know the issues well in advance, you can also apply for a 203(k) mortgage, which lets you fund projects with your original loan.
Homeowners who bought with all the money (or a substantial percentage of it), or those who bought homes early in the pandemic, should have plenty of capital, especially as housing prices real estate have skyrocketed over the past couple of years. This equity can also be used to finance repairs, either through cash refinancing, a home equity loan, or a home equity line of credit (HELOC).
As for more recent buyers who have not had time to build up capital? Admittedly, “it’s difficult now,” says Rasekh. Personal loans and credit cards are higher interest options for financing major repairs if you don’t have enough money to borrow against your home. Some localities also have grant and rebate programs to help fund repairs and upgrades, such as the New York State Energy Research and Development Authority (NYSERDA).
Many large contractors and service companies offer installment payment agreements, allowing for installment payment rather than lump sum payment, particularly if it’s a four or five figure job. But they may also charge interest if you choose to fund a repair project.
The bottom line on home repair costs
Home ownership tends to be a series of unexpected and inconvenient projects, so if you’re a new (or future) homeowner, it’s important to understand how to keep your home in good shape. “Don’t underestimate the amount of effort, time and money it takes on a daily basis,” Rasekh says.
Getting your home maintenance routine under control early is a great way to save money and avoid some long-term stress. Make a habit of doing repairs and maintenance on a regular schedule and always have an emergency fund set aside for the inevitable home repairs that arise.
If you can’t afford to save money, fear not: there are various means, such as bank loans and credit cards, to cover these sudden but necessary projects. Remember that you will probably end up paying more interest than you would otherwise.