How to Handle Surprise Repairs in Your First Year of Homeownership
Think you won’t have to make any repairs to your home just because it’s a new build or it passes the initial home inspection? Think again! A whopping 77% of new homeowners have to make repairs within the first year of moving in, regardless of the age, condition, or size of the property.
A three-in-four chance of something going wrong is not favorable odds for your budget. With an unexpected expense likely in your future, you have time to investigate options for handling this big bill.
Tap the Savings You Have
Handling a repair out of pocket will always be the best option. It’s your money, which means you won’t have to pay interest or finance charges to access it. And, as long as you keep your emergency fund in a flexible account, you won’t face any penalties or delays on these withdrawals.
What savings, you scoff? Admittedly, this option may be on the table if you sunk all your cash into your new home. But it’s something to think about for the future. What can you do to start squirreling away some cash in an emergency fund for the second, third, or fourth year of homeownership? Every little bit helps.
Borrow an Online Installment Loan
Plenty of cash-strapped homeowners borrow online short term loans when they’re faced with an unexpected and essential household repair. These online loans work quickly to fill in the gaps in your savings, giving your budget the boost, it needs to take on work you can’t ignore or delay.
Short term loans get their name for the time it takes you to pay them back. Your exact timeline will depend on your lender, and they can vary anywhere from a few weeks to a few years.
Put Your Repair on Credit
Another way to handle minor household repairs is through a credit card or line of credit. As examples of revolving accounts, these loans aren’t due back like the typical installment loan. You’ll receive a credit limit that you can borrow against to your discretion, withdrawing as much or as little of this limit as you like. You will only pay interest on the amount you use, and your payment frees up your credit so you can use it again.
A line of credit might be a good idea if you suspect your repair will take a few attempts to fix. This way, you can make several draws any time you have credit available.
So far, this list has described options that best fit small repairs that tackle minor issues with your home. But what happens if you suffer a major disaster in your first year of homeownership? Your homeowner’s insurance is designed to help with large-scale emergencies.
Most comprehensive policies cover damages caused by catastrophic events, natural disasters, fires, leaks, and weather. However, there may be conditions on what they cover depending on the cause of these disasters. Always read up on your policy to understand what you pay for.
Don’t Get Caught by Surprise
Insurance, credit, short term loans, and savings are there to help in case something goes wrong with your house. However, regular maintenance might help you stave off these issues long before you need to borrow money or dip into your emergency fund. Follow these tips to keep your house in good shape, and learn more about your insurance policy.