Many homeowners set aside money for their homes. Unfortunately, they neglect other goals. Successful homeownership means understanding that the financial work does not end just because you have the keys to your new home. Here are some financial tips to consider as a new homeowner.
Reevaluate Your Insurance
Homeowners’ insurance is not an option. However, there are other types of insurance that many people consider optional but that take on greater importance now that you own your own home. For example, life insurance can reduce the financial risk for your family if you pass away. It is good to know that they can pay off your mortgage with tax-free proceeds. This is critical if you are married, have children, or have other dependents who you do not want to leave burdened with debt.
A substantial life insurance policy can also help cover monthly expenses, cover college tuition for your children, and give a surviving mate what they need. When looking at life insurance, you want to make sure that you have enough to fully cover your mortgage, the funeral, and your family’s living expenses for at least three years after you pass away.
Disability insurance is another factor to consider. In the United States, 26% of people have a physical or mental disability. If an injury prevents you from working for a couple of months, you may not be able to cover your mortgage payments. Long-term or short-term disability insurance can give you financial coverage in those scenarios.
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Reevaluate Your Budget
You set up a reasonable budget as a renter, which allowed you to save money and put yourself in a position to purchase your own home. It would help if you started thinking about a homeowner-oriented financial plan. This is a crucial step that cannot be overlooked.
The sooner you sit down and create a budget, the better your long-term finances will be. This means factoring in things like mortgage payments and the increased expenses that come from owning a home. These could include homeowners’ association fees and repairs.
As a renter, if your toilet broke or there was an electrical issue, all you had to do was call your landlord. They would fix the problem for you. Now, each one of these expenses is an out-of-pocket expense.
On average, homeowners spend $2,000 each year on minor repairs, maintenance, and landscaping. This does not include larger expenses, like roof repair. You can find a business who are professionals regarding roofing in Atlanta who can help you with roof installation. You may need to call them after a storm when you have roof damage. If you have purchased a used home, you may need to repair or replace the roof because it has reached the end of its life. If you want a quality Atlanta-based roofing company to work for you, you have to expect that there will be substantial out-of-pocket expenses.
Reevaluate Your Retirement Plan
Things get more expensive once you buy a home. However, this doesn’t mean that you should neglect planning for your financial future. A good portion of Americans, if they don’t make any changes, will retire broke. After purchasing a home, review your 401(k) policy. Look at your updated budget, and ask yourself if you can sustain payments or increase contributions to your 401(k).
Budgeting for a house means having an emergency fund. This is not a fund you would use to cover home-related expenses. This is an additional fund for expenses that have nothing to do with house maintenance. Your goal should be to have enough money to live on for at least six months. Many homeowners try to put away enough money for one year worth of expenses. If you are starting on your home buying journey, closely evaluate your spending. Know where your money is going, and know what type of budget you need to set up.
Get Home Ownership Off to the Right Start
Purchasing your home is exciting. It is a major accomplishment and something that will provide a source of security and protection for you for years to come. However, it comes with unique responsibilities. It would help if you planned for these financial realities, preferably before you even buy your new home.