6 Types Of Reserves, Homeowners Should Create!

Many people are attracted, to be participants, in the so – called, American Dream, and own a home, of their own! As a Real Estate Licensed Salesperson, in the State of New York, for over 15 years, I have witnessed, many under – prepared, homeowners, who end – up, being, House – Rich, but financially […]



Many people are attracted, to be participants, in the so – called, American Dream, and own a home, of their own! As a Real Estate Licensed Salesperson, in the State of New York, for over 15 years, I have witnessed, many under – prepared, homeowners, who end – up, being, House – Rich, but financially – poor! This, often, occurs, because, they lack the necessary knowledge, to prepare, effectively, and thoroughly, regarding several key realities, associated, with home ownership! Although, many realize, they will need, to have, sufficient funds, for, the down – payment, and Closing Costs, many, don’t consider, and properly, prepare, for other, financial necessities. With, that in mind, this article will attempt to, briefly, consider, examine, review, and discuss, 6 types of reserves, smart homeowners, should create, and prepare for.

1. 6 months Mortgage payments: Doesn’t it, make sense, to be prepared, for whatever, life, brings us, and have, at least, 6 months, worth of mortgage payments, put – aside, and readily available? Contingency planning is the smartest approach!

2. Reserve for Unforeseen contingencies/ occurrences: While, we realize, we will have to, at some point, replace appliances, roofing, etc, we often, fail to consider, to prepare for potential, unsuspected occurrences! What, if, one needs, for example, to pay for damage, which exceeds, insurance coverage, as well as meet the deductibles? There are many examples of these types of possibilities!

3. Appliances Reserves: Don’t be surprised, when you need (or want) to replace some appliances, such as refrigerators, dishwashers, ovens/ stoves, washer, dryer, etc! It is wise, to have a reserve, ready, when this happens!

4. Major system reserves: The major systems of a house, include: HVAC (heating, and air – conditioning); plumbing, roofs, sewers, etc. Often, this may bring, larger, than anticipated, expenses, which should be planned – for!

5, Repairs: The difference, between repairs, and renovations, is, often, the latter, is voluntary, while, the former, may not be, expected! Some repairs, may, be minor, while others, might be major! Homeowners often, find the need to repair, items, such as, plumbing leaks (pipes, toilets, etc), exterior damages (including entrance – ways, walk – ways, etc), periodic painting (interior and exterior), roof repairs, etc.

6. Upgrades/ renovations: People often want to upgrade certain parts of their home, especially, the kitchens and bathrooms! This includes: kitchen cabinets; replacing floors and counter – tops; bathroom vanities; whole – house painting/ re – flooring/ carpeting, etc. Some decide to renovate areas, including: enlarging/ expanding, etc.

Smart homeowners prepare, so they can reduce stresses, by, having funds available, when needed. Using specific, dedicated, reserves, is often, a wise process, etc!

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