I have been on my own small crusade this week, by advocating that people should stop looking at their homes as a bank, but rather as their greatest investment. The New York Times had an article last week about home equity lines of credit. Lenders slashed the amounts of these credit lines recently for their customers, which caused the clients problems with their credit scores. Lenders have been urging us to use this form of a borrowing, and now they have punished those who took them up on the offer.
This credit turned your home into a cash machine, when you should have looked at it as an investment. Not too long ago, most people saw their homes as their greatest investment. By not taking equity out of it, this investment would grow, and it became an important component in our retirement plans. As businesses moved away from pension funds to 401k or 403b plans, people should have become more cautious about touching their home equity, since they stopped saving for their own retirement. The fact is that most Americans feel it is too hard to save for a secure financial future, or to pay down their debt. We have become accustomed to the lifestyle that credit has afforded us, so we do not save.
If your home is the your greatest asset, should you not take care of it? Many of my home inspections over the last few months have been on foreclosed properties. I realize that these homeowners were (are) facing tough situations, so funds for home care where the last thing on their mind. However, I went over two homes this past week where the owners did have the money, but they did not really check out their home. Items that were apparent, such as a broken water heater, were repaired, but the crumbling chimney was not. There have been a few clients who hired me to inspect their home, simply because they had a problem, and they wanted an answer. You do not really need an inspector for this, but at times it may help.
I have mentioned having funds available for repairs on this blog, but you may wish to consider home warranty insurance too. This insurance is being offered more at the time of closing on a home. It will not take care of the structure, but it will deal with appliances, water heater, and air conditioning systems. The companies providing this insurance have become creative with their policies by allowing you to customize them. I saw that swimming pools could be included. The coverage on these policies will cover the items that homeowners insurance does not, so the two together can provide a good umbrella for your home.
Preventive maintenance is your cheapest route when caring for your home. It is easy to pass by small problems, to eventually ignore them. Once a week, month, or at the most a year, take a quick look at your house from top to bottom, and make the repairs. Fixing locations where water can get into the structure is vital. Moisture damage to the framing is hard to notice, but devastating to the home.