Even if you paid monthly rent, utilities and repairs at your old place, you likely aren’t accustomed to making the right payments for property ownership. While you begin adjusting to your new life as a homeowner, you should also adjust your budget to account for your new expenses to ensure that you can keep your home for years to come.
Recognize Ongoing Costs
Unless you are exceptionally wealthy and purchased your home outright – in which case, you can probably stop reading now because this post isn’t for you – you will have a monthly mortgage payment. Usually due by the first of every month, your mortgage is by far the most important expense you have as a homeowner; if you stop paying your mortgage, the bank will take possession of your home, and your credit will be forever marred. If necessary, you should let other bills pile up to ensure that your mortgage doesn’t become delinquent. However, with a strong budget, you shouldn’t have to do that.
Typically included in your monthly mortgage are three important payments:
In addition to your mortgage, you should have other somewhat regular mandatory costs, like payments to a homeowner’s association and various utilities, like electricity, water, gas, sewer and trash. Plus, like it or not, you will pay for maintenance and repairs on a regular basis. If you aren’t handy and you are rather certain that your home needs much TLC, you might consider acquiring a home warranty; you can read reviews of home warranty plans online to determine whether this option is right for you.
Plan Big Projects
Ongoing maintenance should only require between 1 and 2 percent of your income, but larger projects, like redoing the kitchen, reroofing, digging a pool and others, require special planning and saving. Thanks to your home inspection, you should have a pretty good idea of your home’s condition; you should use the suggestions in your inspection report to guide your big project plans for the next few years. You might also speak with contractors to understand what your projects will cost, so you can develop a savings plan to help you afford your projects in an appropriate time period.
You should revisit these plans – and your budget – annually to determine if you need to add more projects to your list or revise your saving and spending habits. When you know where your money is going, you can avoid those financial surprises that lose you your dream home.