Sure, that old Victorian home seems great now. It has original floorboards and the crown molding is so charming. But once you purchase, every creaky step will send a shiver up your spine: One wrong move and the whole place could crumble down faster than you can say "poor house." It's a scary thought, but you're not alone. In fact, threat of costly repairs is the number one stress for homeowners.
In a recent study by NerdWallet, 65% of homeowners have expressed anxiety about financing their home. Of that group, three quarters said their anxiety resulted from bigger, unexpected home repair costs. While the homeowner might be saying, "Yeah, duh!" This might come as a surprise for those in the market for their first home. It's easy to think that because most homeowners are anxious about money, those looking to buy a home might be doubly anxious about it, and it might even be the main thing deterring them from looking or making a purchase.
Whether it's a surprising pipe burst, festering mold or an inundating flash flood that your septic system just wasn't ready for, a last minute emergency doesn't need to mean breaking the bank. In fact, the cost of owning a home isn't even as overwhelming as it used to be. According to the study, homeowners have only spent 21.5% of their incomes for home-related costs since 2010, down from 25% in 2008.
Home repairs can be daunting as they crop up out of nowhere, but the truth is, those undergoing the home-buying process are actually in the best position to avoid costs by simply planning ahead.
"People put every cent into their first home and, all of a sudden, the dryer goes off and it's $2000, or a pipe bursts after a deep freeze and that's all money that they didn't expect to spend," says Antonia Koller, a realtor with Zumper. "People walk in and it looks all glossy, but there are things they can't see like a dishwasher that's ten years old."
An easy fix to knowing what you're signing up for financially? Bringing in a home inspector to review the nooks and crannies and identify where you'll need to put in more money. They'll be able to tell if small things like a watermark on the ceiling or a leaky pipe can translate into huge costs ten years from now (or even sooner.) Though a home inspection is mandatory before you sign on the dotted line, it's important that you're actually there alongside the inspector to ask questions. While having a certification is great, not all home inspectors are created equal, and leaving them alone leaves the potential for corner-cutting. Be there for the inspection to see what they're looking at and ask all the questions you need.
Buying a new construction? Koller says it doesn't mean you're home-free from costly surprises. Just a couple of years ago, a case of bad plaster in a new construction meant unexpected illness (and a hefty replacement fee) for the new homeowners. A reputable property inspector is a surefire way to protect against unexpected incidents like this.
Already in your home and dealing with an unexpected cost? There are options to finance the repairs. Depending on the cause, you may be entitled to funding from your insurance provider. If it's not covered through insurance, you can also look into personal home improvement loans for costs under $50,000 through a bank, online lender, or local credit union. The Federal Housing Administration also offers options for home renovation financing. Don't have stellar credit or need a bigger chunk of change? A home equity loan through a second mortgage may be the way to go.