Many people are drawn to participate in the so-called American Dream, and they own their own home. As a licensed real estate salesperson, in New York State, for over 15 years, I have witnessed many poorly prepared homeowners, who end up being, Home – Rich, but economically – poor! This often occurs because they lack the knowledge to effectively and fully prepare for several key realities associated with home ownership. Although, many realize that they will need to have sufficient funds for the down payment and closing costs, many do not consider and adequately prepare for other financial needs. With that in mind, this article will briefly attempt to consider, examine, review, and discuss 6 types of reservations that smart homeowners should create and prepare for.
1. Mortgage payments 6 months: Doesn’t it make sense to be prepared for whatever life throws at us and have at least 6 months of mortgage payments set aside and readily available? Contingency planning is the smartest approach!
2. Reserve for contingencies / unforeseen events: While we realize that, at some point, we will have to replace appliances, ceilings, etc., we often do not consider it to prepare for possible unexpected events. What if one needs, for example, to pay for damages, which exceed insurance coverage, as well as meet deductibles? There are many examples of these kinds of possibilities!
3. Household appliance reservations: Don’t be surprised when you need (or want) to replace some appliances, such as refrigerators, dishwashers, ovens / ranges, washer, dryer, etc.! It is advisable to have a reserve, ready, when this happens!
Four. Main reserves of the system: The main systems in a house include: Hvac (heating and air conditioning); plumbing, roofing, sewer, etc. Often times, this can bring in higher expenses than anticipated, which must be planned for!
5, Repair: The difference between repairs and renovations is often that the latter are voluntary, while the former may not be expected. Some repairs may be minor, while others may be major. Homeowners often find the need to repair items such as plumbing leaks (pipes, toilets, etc.), exterior damage (including driveways, hallways, etc.), periodic painting (interior and exterior), roof repairs, etc.
6. Upgrades / Renovations: People often want to improve certain parts of their home, especially kitchens and bathrooms! This includes: kitchen cabinets; replacement of floors and countertops; bathroom vanities; whole house painting / re-flooring / carpet etc. Some decide to renovate areas, including: expansion / expansion, etc.
Smart homeowners prepare to reduce stress by having funds available when needed. Using specific, dedicated reservations is often a smart process, etc.