Deciding to buy a home is a surprisingly easy choice compared to actually buying a home. Going through the motions of getting a mortgage can be very complicated, involving many different professionals — from real estate agents to lawyers and property inspectors.
In all the excitement, it can be easy to overlook seemingly obvious things that come with homeownership. But don’t worry — this article is here to help you navigate this confusing time like a pro.
Don’t Get Caught by “Hidden” Costs
If you’re new to real estate, it’s easy to think that the selling price is all that you have to pay to get the keys to a new home. But veterans know that’s just one of many costs involved.
While it’s certainly the biggest one, other lesser-known and less expensive expenses can be challenging if you aren’t prepared for them.
Beyond the purchase price, a new house can include the following fees:
- Transfer taxes
- Lawyer’s fees
- Home insurance
- Property taxes
- Closing costs
These expenses can add up quickly, so it’s crucial to budget and plan accordingly. Research the specific costs in your area and factor them into your overall home-buying budget.
Plan for Future Maintenance and Repairs
Home repairs have a sneaky way of cropping up when you least expect them — no matter how pristine your house appears to be at the sale. Having a financial safety net in the form of an emergency fund is crucial.
Aim to save at least three to six months’ worth of living expenses. This way, you’ll have the resources to handle any unexpected repairs or emergencies without dipping into your regular budget.
Open a Line of Credit
Many homeowners keep a line of credit on standby, ready to tap into if a significant repair or renovation arises and their savings can’t handle it. Having a line of credit gives you a financial cushion and the flexibility to handle unexpected expenses without causing a strain on your budget.
While a line of credit can be a helpful tool for homeowners, you should always consider opening an account carefully. Make sure you understand the main elements of a personal loan and how they apply to your line of credit to ensure it works for you.
Research Home Warranties
Consider purchasing a home warranty during your first year of homeownership. A home warranty can provide coverage for major systems and appliances in case of unexpected breakdowns.
While it may involve an additional monthly premium, it may offer peace of mind and protect you from hefty repair bills during your initial year. Weigh the pros and cons to determine if it’s the right fit for your finances.
Commit to Timely Repairs and Routine Maintenance
Taking proactive steps to maintain your home can save you money in the long run. Create a maintenance checklist and stick to it. Regularly inspect your home’s systems, clean gutters, change HVAC filters, and perform necessary upkeep tasks. These preventative chores can help you catch minor issues before they turn into expensive repairs.
Bottom Line: Be Prepared
Becoming a homeowner is a huge financial step, and it’s crucial to be financially prepared for the responsibilities that come with owning a home.
Understand the hidden costs involved in the homebuying process, plan for future maintenance and repairs, and establish a financial safety net. By saving for unexpected repairs, having a line of credit as backup, and being proactive about home maintenance, you’ll be well-equipped to handle the joys — and — challenges of homeownership.