Homeownership can be expensive. Disposable income may be scarce for first-time buyers who stretched themselves to raise enough capital for the home purchase. It can therefore be quite a shock when maintenance and repair costs turn out to be more expensive than first thought.
Most people are aware that money should be set aside for essential repairs and maintenance, but many might not realize how much. On average, homeowners spend between 1 and 4 percent of the value of their home on its upkeep each year. This means that on a property costing $300,000, up to $12,000 could be needed for maintenance and repairs. For first-time homebuyers especially, this might seem a staggering amount of money, particularly if they have no savings. It is thus vital to factor these costs into a budget and to create an emergency fund. This fund should contain enough money to cater for six months worth of living expenses.
Having an emergency fund also helps when large, unexpected payments arrive. For example, some people have mortgages that don't automatically include property taxes and homeowners insurance with the monthly home payments. In such circumstances, a single, larger payment is taken later. It's easy to forget about this until the bill arrives, so budgeting is important.
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Owning property can give people a greater sense of belonging and security than renting might. However, it is important to understand the realistic costs of maintenance and repair expenses to ensure that personal finance is not adversely affected.