Should a home owner invest in expensive maintenance for an underwater house?
When you bought your home a few years ago, you offered a significant down payment, believing that you were investing that money in your future. And when friends and financial advisors warned you about the maintenance costs that come with home ownership, you took out a calculator, compared your salary and growing home value with worst case scenario maintenance costs, and decided you could easily afford an occasional leaking roof or plumbing emergency. And for the first few years, you were right.
But times have changed. Your house has not only failed to grow in value, but is actually worth less than you still owe, even after years of on-time mortgage payments. Your down payment is long gone. And now your exterior paint is starting to peel. What’s next?
The Maintenance Bind: The Challenge for Underwater Home Owners
You want to keep your home looking nice [3], since you’re part of a community and a little peeling paint can have a ripple effect that undermines an entire neighborhood. But an exterior paint job can cost thousands of dollars. And you’re already facing an enormous bill if you need to sell your underwater house within the next few years. So what can you do? Add a few thousand dollars to an already significant loss? Or let the paint keep peeling and watch the value of your home decline further? Here are a few factors to consider:
Invest and Solve the Problem If:
- The problem is a serious structural issue with a known cost that will only increase as time goes by. A leaking roof will only become more expensive if it isn’t fixed. Besides, a roof leak is not a cosmetic issue. It’s demoralizing and difficult to live with.
- The investment may improve the market value of the home. An exterior paint job might be necessary if you need to sell the home. But new wallpaper in the living room may not be. Try to put off the projects that won’t return any of their value when you decide to sell.
- You can find deals and reasonable financing options. Rigorously compare estimates from different contractors, and find out what you can fix on your own. Some fixes are surprisingly easy. (Just don’t injure yourself or get in over your head.)
Maintenance concerns can be a serious dilemma for struggling homeowners [4]. But keep a cool a head, be realistic, and account for every risk before you make a move. If you’re experiencing maintenance issues with your devalued home, share your thoughts and advice in the comment section below.