Keeping Finances on Track: 3 Tips for New Homeowners
Owning a home is expensive but it is a truly rewarding experience. However, the major downside to having a place to call your own is the cost. Yes, the downpayment isn’t the only financial issue you’ll have to face – there are other hurdles associated with home owning. So how can you handle them?
Reconfigure your budget
A monthly mortgage is different from rental payment and as such, adjusting your budget accordingly is needed. For instance, your heating and electricity bill will definitely go up if you’re moving into a much bigger space. Plus, if you bought a house with a lawn then you have to spend in order to maintain that space.
So what do you do? First, spend a few months tracking all of your expenses. Doing this gives you an idea of how to retool your budget to reflect the costs of living in your new place. You will most likely find yourself spending more so you’ll need to adjust expenses in other categories, like leisure, in order to compensate.
Prepare yourself for the cost of repair and maintenance
Most homeowners will spend 1 to 4% of their homes’ value each year on repairs and maintenance. Given the necessity of such expenses, you should make sure there’s enough funds in your emergency savings to cover the costs. Keep in mind that most repairs aren’t planned – they can appear unexpectedly. This is why it’s important to have more than enough saved to pay for the expense.
Assume that property taxes will rise
The amount you pay on property tax depends on the value of your home and local tax rates. However, don’t always think the rate will remain that way. Given the tendency of property taxes to rise, it’s always best to have extra funds in your savings so you don’t have to scramble just to make payments.
Owning a home is so rewarding, but to live with as little stress as possible means being able to budget accordingly.