You may have already moved into the house you bought, but that doesn’t mean you’re free from financial obligations. We’re not talking about just the mortgage either. On top of the mortgage, you need to think of everything else that might come up along the way.
You don’t want to be left unprotected when expenses come calling. Your emergency funds should be set up to cover the following.
According to housing experts, one of the biggest mistakes homeowners make when switching from renting to owning a house is looking for a house with a mortgage that costs as much as the rent. It’s better to find a house with mortgage payments lower than your rent; otherwise, you can’t really afford payments.
This is because there are other costs to consider. Mortgage-related expenses in the form of closing costs and moving expenses require money.
You’ll also need to spend to turn that shell of a house into a comfortable home. And even after all that’s done, you still have to deal with things such as dryer repair in your Salt Lake City home. These repairs sneak up on you and demand immediate response if you don’t want your house to be in big trouble.
Appliances are not the only things in the house that need attention. Nature can attack in several ways, all of which are destructive. You may be dealing with water damage, cracks or leaks. These might make it hard to live in the house until they are resolved completely. Every minute you spend ignoring the problem means you have to spend more when you eventually deal with them.
Though your insurance company might cover some of these expenses, it’s better to have your funds ready in case they can’t cover everything completely. For urgent needs, you may choose to pay for the repairs yourself and have the insurance company reimburse you later. Should you choose to do this, keep them updated so that you’ll not get in trouble for going ahead with the repairs. You may have the money, but you’re paying for that insurance so you should be able to collect it when you need it.
You’ve kept the house in good condition, so your emergency funds haven’t been touched in a while. This gives you disposable funds for any upgrades you’ve been thinking of having. A growing family may need additional rooms or bigger living spaces. You may also want to upgrade kitchen equipment and heating and cooling systems.
Some homeowners choose to get a construction or renovation loan to cover their expenses, but if you can afford it, you don’t need to worry about interest rates. And you’re increasing the value of your property in the process, which means you can sell it for a bit of profit. You can also adjust your insurance after the upgrades, so you can save on that, too.
It’s always a good thing to have emergency funds for household emergencies. You’ll never know what will come up, but you’ll be glad you have money to use to get things back on track.