Best Rate for Buyers Mortgage Blog

A safety fund for your home

Every financial advisor suggests that you put aside a safety fund before you do anything else. You should save three to six months’ expenses in case you lose your job or suffer some sort of financial misfortune. You should have a safety fund before you save for retirement or put money into your kids’ college fund. You can take this thinking a step further and put together a special safety fund specifically for your home.

Think about the money you spend on your home. The monthly mortgage payment probably is the first thing that comes to mind. It is your largest home expense, and it comes every month. But, what else is there? Most people pay their real estate taxes through their mortgages, so it looks like the mortgage is the only expense. Think harder. In addition to your mortgage, you probably pay homeowners insurance. If you live in a condo or a coop, you have a monthly association fee. In some places, like New York City, this monthly fee can be quite high.

Next, there are the unexpected expenses. You may have a problem with your foundation, or you could have a flood in your basement. During a storm, you may find a leak in your roof. These problems have to be addressed, often quickly. They have to be resolved whether you have the money or not. While these expenses can be unexpected, you can prepare for them by putting money aside.

This is why your home safety fund becomes important.
Start with your mortgage payment. Put aside enough money to cover your mortgage for at least three months. Then, turn to your homeowners insurance and (if applicable) association fees. Do the same. Save enough money to pay your homeowners insurance and association fees for at least three months. Finally, think about the unexpected. How much would it cost to fix one major problem, such as a roof, kitchen or termite problem? Find out where your risk is most likely to be, and put that money aside, too.

It is always best to plan ahead. Put together your home safety fund. If you don’t need it, that money will do nothing but accumulate interest, which just puts more money into your pocket. But, if you lose your job or have to fix a leak in your bathroom, you’ll be happy that you have your home safety fund.

posted by BestRateforBuyers @ 1:00 PM