Buying a home is just the beginning.
- Buying a new home comes with new financial obligations beyond just the mortgage.
- You’ll want to make certain you’re ready to cover new costs like home maintenance.
- You might be able to save money on property taxes and homeowners insurance.
If you have recently become a homeowner for the first time, you are probably already aware you have some new money issues to address. This goes beyond just setting up automated mortgage payments or making sure you send in your checks to your lender each month.
In fact, many aspects of your financial life have changed due to your new purchase, so you should be sure to make these four moves so you’re ready to deal with your new reality.
1. Bulk up your emergency fund
As a new homeowner, your primary concern should be with making certain you are able to make your mortgage payments on time every month. If you miss payments, you could be hit with late fees or even risk your lender foreclosing and taking your house. This could be financially devastating.
An emergency fund reduces the likelihood you’ll end up missing a payment even if other things go wrong in your life. You should make certain to have enough money in a high-yield savings account so you can cover several months of living expenses — including your new housing costs.
2. Start a home maintenance fund
One of the biggest changes associated with buying a first home is that you become responsible for maintenance and repairs that were likely previously handled by others, such as your landlord or your parents if you moved out of a family home.
Maintaining your house can be expensive, and you don’t want to face surprise costs that end up sending you into debt. You also don’t want to put off routine upgrades or fixes and turn little problems into big ones.
To make sure you have the money necessary to cover your ongoing expenses — as well as big surprise issues that crop up — set aside around 1% of your home’s value each year in a maintenance and repair account. Even if you don’t use this money in some years, you’ll be ready when a major repair is needed, such as a new roof.