Money in reserves

Hi all so we have continued our house search and found a few potential options. Currently we have a savings account and then a house account. Do you think after all is said and done down payment and closing that 10k is enough in reserves or should we have more? We will still have our general savings account but 10k will be left for anything that may pop up!

Re: Money in reserves

For me, that is not enough, I would want about 20 not including a 401k or Roth IRA. When we moved in, we still needed furniture, and of course we ended up having to replace plumbing because it broke right after closing. I would want a little more flexibility and peace of mind.

Re: Money in reserves

I'd have to say, that's not enough either.

Most financial advisers would suggest having more than that depending upon your circumstances.

When we purchased 10 years ago, we had to upgrade our electrical (aluminum wiring). It was dangerous and the insurance company required it. Replacing all of the electrical and upgrading the box was 11K ten years ago.

A new roof, boiler, etc. will eat up the majority of 10K.

And I didn't mention furniture.

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$10k wouldn't even be close to what we'd be comfortable with. We spent more than double that before we even moved in - and our house was totally move-in ready!

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Money in reserves

Do what you are comfortable with. We had less than that and we have been fine.

But we do 99% of the work ourselves so while we have had issues none which have cost a ton because we have fixed it our self.

Money in reserves

I think you have to do what you feel comfortable with. We probably had around that much and there were a few unforeseen expenses after moving in, but like with any house related issues...you do what you can afford and other things may have to wait! Good luck!

Re: Money in reserves

I think that's fine

Re: Money in reserves

Obviously, more money saved is better, but plenty of people close with only $10K left in savings after all is said and done. If you are saying you have $10K left in a house account plus additional money still in a separate savings account, I think you will be more than fine. But the comfort level will also depend on whether you will be able to continue to save once you close on the house or whether the cost of the house and other fixed expenses will eat up most of your income.

Also, many people WANT to do work, even to a move-in ready house, that isn't really necessary to do right away. It's more convenient to do before moving in, yes, but not a must-do (here I am talking more about cosmetic improvements and upgrades, not fixing things that unexpectedly break or problems with major systems that make the home unliveable or unsafe). But I guess I am saying that if you have to hold off on renovating a kitchen or bathroom, or that type of thing, you can do it. Same with furniture - yes, it's nice to have a house fully furnished when you move in, but many people have to do it as a gradual process, starting with necessities first, after they move a house. It's just not financially feasible.

I think it's always a great idea to save as much as possible before buying a home AND not buying at the top of your budget. However, prices remain relatively low and interest rates are still historically low, and these are market conditions that can and eventually will change (we don't know when exactly, but we know the market isn't static). So if you wait a year to save up more money, any additional savings could be offset by increased prices and interest rates. Savings is an important component when deciding if you are financially ready to buy, but not the only component.

Message edited 4/9/2015 11:41:36 AM.

Money in reserves

Only you know how much money you plan on saving after you buy and what your renovation plans are. We had a little more than that plus the money we allocated for renovations we had to make before moving in. It all worked out but we didn't buy a whole house of new furniture or do anything else extravagant for the first two years

Money in reserves

We had less and we've been fine.

Money in reserves

I think it really depends on what you want to do in the house or if it needs work. I think a $10,000 contingency fund is fine and more than most. Personally we had over $50,000 in ours but that was mainly because I'm a spoiled brat and wanted all new furniture for the entire house and did some cosmetic work that I wanted, not needed. We did have to replace all the kitchen appliances within the first 2 months and fix a roof (all unexpected but your 10,000 would definitely cover that).

My parents when they bought their house man moons ago, said they closed and had $50 left in their accounts and they lived to tell the tale lol.

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Just another way to look at this - instead of a set amount - like $10K - when we decided what we would be comfortable with - what I did was take a snapshot of 1 months worth of expenses and then multiply that by the number of months "safety net" I wanted to have. So let's say your monthly expenses are $2500 and you wanted to be secure for 6 months - you would put aside $15K.

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Money in reserves

Thank you all for your input!!! As far as furniture we have all new stuff and my dad is a custom builder so any work and furniture needed will be done and built buy him at no cost. My dad is pretty well connected with other trades so we are likely not going to incur lots of costs! Thank you again!

Re: Money in reserves

Does your dad have a website? Feel free to fm.

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I think we had to drop 30k the first week we moved in (new septic, new roof, etc..)...BUT we knew that when we purchased the house. Unless it was necessary, we just waited until we had the cash put aside to do it.

Re: Money in reserves