Most people have heard that it’s important to have an emergency fund. Everyone can benefit from having one, but homeowners especially need to have one. That’s because some expenses are unique to homeowners that a well-funded emergency savings fund can help with.
Sudden Repair Expenses
Wear and tear on a house is something that usually happens gradually. It’s not always that way though. Natural disasters and storms can damage a home suddenly.
Damage may also go undetected for some time until it gets bad enough that it suddenly becomes quite obvious (plumbing problems are a great example). These problems need immediate attention, meaning you have to pull together the money to finance sudden repairs quickly. That’s a lot easier with an emergency fund.
Lenders expect to be repaid for the money they loan to homeowners. That’s why they do credit checks and other things to decide how risky it is to lend money to someone. While those are pretty good risk predictors, they aren’t foolproof, especially since economic trouble can befall homeowners quite suddenly.
If that happens to you, you may struggle to make your payments. Once you start failing to make mortgage payments, your home will fall into preforeclosure. If not resolved, your home may be foreclosed on. A good emergency fund could help you avoid that, or at least delay it.
Why Homeowners Need an Emergency Fund: Sudden Increases in Utilities
How much you pay for utilities usually varies from month to month. If you’ve experienced a sudden increase in the cost of your utilities, there are several reasons why that could be happening. It could be due to a variance in how much you use your utilities. It can also be because the base price of the utility or providing that service has increased and the utility company is passing the increase along to the customer. Since utilities tend to be more a necessity than a convenience these days, it helps to have extra money you can rely on if you experience a sudden increase in the cost of your utilities. An emergency fund can help you cover the bills while you figure out how to get the cost back under control.
Life has a way of throwing unexpected circumstances and expenses at the people living it. That can put homeowners in a precarious situation, depending on how much money they have to come up with on short notice. It’s never easy to decide which essential expenses to pay. Set money aside so you have a well-financed emergency fund you can pull from if the need arises.
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