Buying a house should be an exciting, happy time because it is a tremendous commitment to adulthood. For the first time in your life, you will own something of significant value – or that’s the plan, at least. However, if you don’t plan and budget properly first, this could turn out to be the worst decision you will ever make. So take the time to make this monumental decision, do your research beforehand, and then put together a financial plan that will work for you in the long run. Here are five practical tips to ensure that this is a positive experience for you:
Hidden Costs
Buyer beware. That is one of the most honest statements you will ever hear. Before you sign on the dotted line and commit yourself to decades of mortgage payments, be sure to check for any hidden costs that you aren’t aware of. Moving fees, closing costs, and mortgage origination charges can all sneak up and devastate your budget if they are not factored in beforehand.
Maintenance Fund
As exciting as owning your own home is, prepare for things to go wrong from time to time over the years. For example, you should start a maintenance fund for rainy days when you buy your first home. This way, you will not be scrambling to put money together to do the necessary repairs and HVAC maintenance. You might think that that is what insurance is for, but the truth is you won’t always want to claim for the smaller things because sometimes the deductible is more than the repair charges.
Insurance
Homeowners insurance from trustworthy companies like trustedunion.com is often necessary for you to get a mortgage. However, this insurance usually covers the buildings and fixtures, not your household contents like furniture and appliances. The thing about insurance is that it may not seem necessary at the time, but if something bad happens, you will be so grateful that you have it. If you are the sole income earner in your household, you should also consider getting life insurance to cover your mortgage twice so that your family is provided for if anything has to happen to you. This will mean you will need to consult an estate planning attorney to advise you on how best to go about this process.
Affordability
Before rushing in and buying the first home you fall in love with, step back and do some affordability checks. Just because you are paying a certain amount in rent as a tenant does not mean you can afford that as your mortgage repayment. There are other costs to factor in, so deduct those amounts first, and then the figure you are left with is what you can afford as a monthly repayment.
Rates And Taxes
Consult an account to assist with your tax returns for the first year of your being a homeowner. They will happily guide you through your return submission, make sure that it is completed correctly, and help you maximize your rebate. Being a homeowner changes your tax situation significantly, so you will need extra help until you get the hang of it.
