Financial Tips For First-Time Homeowners

The purchase of a home should be a happy, exciting time. It is a huge commitment towards adulthood. You will be able to own something significant for the first time, or so the plan goes. If you do not plan and budget well, it could be the worst thing you ever decide to do. Take the time to research and plan your finances before making this major decision. Here are five tips that will help you make this a positive experience:

Hidden Costs

Buyer beware. This is probably the most honest statement you’ll ever hear. Be sure to look for hidden costs before you commit to a decades-long mortgage. If you don’t factor in moving fees, mortgage origination costs, and closing costs, they can be a major drain on your budget.

Maintenance Fund

Even though owning a home can be exciting, you should prepare yourself for the inevitable problems that will arise over time. When you purchase your first house, you can start a fund to cover rainy days. You won’t have to scramble to find money to pay for repairs or HVAC maintenance. Insurance is not always for small repairs. The deductible can be higher than the cost of the repairs.

Insurance

It is common for mortgages to require homeowners insurance. This insurance covers your home’s structure and fixtures but not its contents. Insurance may not seem important at first, but you’ll be glad you have it if you need it. If you are the only income earner for your family, you should consider life insurance that covers your mortgage twice. This will ensure your family’s financial security in case you were to die. You will then need to consult an estate planner for advice on the best way to proceed.

Affordability

Do some affordability checks before you rush in to buy the first house that catches your eye. You may be paying rent, but that does not mean that you can afford to pay monthly mortgage payments. You need to take into account other costs, so subtract them first. Then, you will know what you can afford for a monthly mortgage repayment.

Taxes and Rates

Consult an account to help you with your first-year tax return as a homeowner. They can guide you through the process of filing your tax return and help you maximize your refund. You will need extra assistance until you are comfortable with your new tax situation.