Benefit #1: Maintaining Your Home’s Value
If the plan is to keep the home, preserve as much of the house’s market value as possible. The plan right now may be to keep the house forever but plans sometimes change. If an increased level of care becomes necessary, that could be expensive, and the home may need to be sold to pay for it.
Keeping the home in a condition that will attract the highest market value will be very beneficial.
Access to Future Capital
If you need to borrow money in the future, it can be borrowed against the house’s appraised value without selling it. The higher the value, the more funds will be available.
Homeownership is one of the biggest net worth components for many Americans, especially if the homeowner has paid off the mortgage. The next section includes tips to maintain the property’s condition and value.
Property Condition
Many seniors let maintenance slide as their expenses increase and their income remains fixed.
For example, if a senior on a fixed budget is living alone and one bathroom needs repairs and is no longer usable, there are two choices: fix it and maintain the home’s value or you could just leave it.
Similar isolated events can build up slowly over a 10- or 15-year period, and when the senior gets ready to sell their home or make repairs, those little projects have turned into seven or eight big projects.
This is called deferred maintenance. So, if the plan is to keep the home, make sure that you set a realistic budget for the monthly and annual maintenance. Set aside 1-3% of the total value of the home for maintenance every year. For a $200,000 house, expect to spend $2,000 – $6,000 per year on maintenance.
If the home is older, and you estimate maintenance costs will be 3%, set aside $400 per month so you have $4800 saved.
Major System Costs
Every major component of the home has a certain lifespan. You have probably heard, “They do not make them like they used to.” That is a true statement today.
Below are some rough estimates of how long your home’s major systems will last and typical replacement costs. Many factors affect lifespan and cost—use these averages as the starting point for a budget. If you need access to a contractor for your home, feel free to reach out to us, and we will introduce you to someone in our trusted network.
Roof Replacement
A new roof should last anywhere from 10 to 20+ years but it depends on where the house is located. For an 1,800 sq ft home, a new roof will typically cost from $6,000 to $12,000.
Foundation Repair
Repairs to damaged foundations are expensive, and a weak foundation also affects other areas of the home, such as plumbing problems.
If you notice cracks on the outside of the house or large cracks on your interior walls, you may have a foundation issue.
Consider having a licensed structural engineer who is familiar with your area perform an inspection of the foundation. A structural engineer is not trying to sell foundation work; their job is to determine if there is active movement in a home and create a plan to fix it. Foundation repair can cost from $5,000 to over $15,000.
Heating, Ventilation, and
Air Conditioning (HVAC)
Modern HVAC systems usually last between eight and 12 years. Older units seem to last longer, but every machine has an expiration date. Too often, these systems break down in the middle of the summer when it is sweltering outside.
Budget accordingly. Clients who regularly change their air filters (monthly) and have their units serviced each year have reported a much longer lifespan for their equipment.
The cost to replace HVAC equipment (inside and outside) ranges from $6,000 to over $10,000.
Plumbing
Plumbing problems and the costs to fix them can vary. If your house has ever flooded due to a sewer backup or a busted hot water heater, you know what we mean. Repairs like a leaky faucet can be minor, or extensive, like sewer pipe replacement.
One of our senior friends received an unusually large water bill one month. She had a plumber test the water and sewer system—there was a slab leak at her home.
The pipes under the house had a crack and were leaking water, causing the soil to swell up and the foundation to buckle, which damaged the walls. As a result, some doors in the house could not open while others could not close.
The plumber performed a leak isolation test and located the issue. The homeowner’s insurance did not cover all of the costs, and she had to pay a few thousand dollars out of pocket. Plumbing repairs can range from $200 (basic repairs) to over $15,000 (major repairs).
Electrical
Your electrical system should be low maintenance. If the home’s original electrical panel is out of code or has aluminum wiring, look into getting those items replaced and up to the current standards. At the very least, have your system inspected by a licensed electrician to ensure that you and your home are safe.
Any system can require minor repairs. If you add extra lights or outlets to your existing system, make sure that your electrical box can handle the increased load.
Electrical repair costs range from $150 (small repair) to $3,000 (to replace an electrical panel) and can exceed $10,000 (if you need to rewire the house and replace old aluminum wiring with copper wiring).
Benefit #2: Getting the Right Help You Need
What are your first steps if you are in the fast-track planning mode? If there is an illness or sudden health crisis, addressing this situation right away is more important than the value of the house. You want to be able to live as comfortably and safely in your home as possible.
Start thinking about who might help in the short term. Also, determine what local resources and agencies are available to help in your home if needed.
Additional help can range from mobility aids like ramps instead of stairs, meal preparation, and transportation to doctor appointments. If you plan to stay in your home and need extra help, who can assist you with these needs?
Benefit #3: Creating a Smooth Transition
To ensure a smooth transition, address immediate concerns and then set up a plan for the future. Here are a few questions to help with this:
If there is a health or mobility issue, who will be the caregiver or assistant?
How will you find the right caregiver to help you in your home?
Who will help with the home maintenance?
How will this home be passed on (given or sold to a family member)?
Who will take future ownership of the home, and when will it happen?
Who will be in charge of this process?
Did you document this process in collaboration with an attorney?
Legal Matters
You have probably read about celebrities, with access to finances and attorneys, who pass away with no will. Consult an attorney and get these documents together today. Some of our clients do not create a will, trust, or other planning documents because they think these are too expensive.
How much is it worth to you to have plans in place that can be followed during difficult times? These documents are an investment, not an expense. There are professionals who work with people on a budget; however, do not decide purely on price.
An attorney can create a trust so that your assets would not have to go through the probate process but would pass directly to your heirs.
A will goes through the county probate process and is contestable (challengeable) in court. A will and all the assets in it also become public record.
Make sure you work with a legal professional who specializes in this type of work. We have seen many families that had legal documents created only to find out later the documents were not valid.