Housing Market Prices Are Wild And Some People Regret Buying Now

“You should really be thinking about this in terms of having cash set aside upfront for any issues … rather than trying to finance that,” said Jeremy Bohne, a financial advisor and founder of Paceline Wealth Management. “There are options to finance this. That doesn’t mean they’re good ones.”

The rule of thumb about how much to save for unexpected repairs varies based on the condition of the home and an owner’s financial circumstances. Jason Blumstein, CEO of Julius Wealth Advisors, said he typically tells owners to save 1% to 4% of a home’s value each year for housing expenses. L.J. Jones, a financial planner and founder of Developing Financial, put it at $1 for every square foot per year.

Roberge advises setting aside 2% of the value of a home each year on maintenance and repairs, although he also acknowledged, “It’s a difficult time. And not everyone can follow these rules of thumb.”

Experts also advise that homeowners think of their housing fund as separate from their emergency fund, which should be enough to cover three to six months of expenses in case of unemployment. “It may be prudent for a homeowner who wants to protect themselves a little more from the unexpected to have a 12-month cash reserve rather than a three-to-six-month reserve,” said John Boyd, founder of MDRN Wealth.

Still, home repairs can quickly deplete savings, even when they seem ample. BuzzFeed News spoke with other homeowners who were unable to thoroughly inspect their homes before closing due to health and safety restrictions during the early months of the pandemic and who are now dealing with tens of thousands of dollars in unexpected costs.

In Westchester County, New York, Sarah H. had bought a house for $670,000 ($11,000 above asking) in mid-2020, when pandemic restrictions only allowed her and her fiancé 20 minutes to view the property and prohibited them from bringing anyone with them for a second opinion. “The sellers weren’t the easiest people to work with,” she said. Their inspector went in to see the house separately, finding some asbestos and some old termite damage. Sarah had to push hard for the sellers to let in a termite inspector — a “red flag,” she later realized. “I think he was rushed.” He told her the house was fine, but “turns out we have horrible, horrible termite damage.” Renovating the kitchen, originally estimated to be a $40,000 project, would now cost $80,000 because of the damage the termites had wrought in that room alone. “We know that the termite damage continues on throughout the house… that’s only getting worse with time,” Sarah said.