Buying a home is probably the largest purchase you will ever make, and it can be very difficult to know how to manage your new finances. There are many factors to consider: mortgage rates, home appraisals, home inspections, and moving costs, just to name a few. It’s no wonder that a recent survey by the National Endowment for Financial Education found that homeownership leads to increased levels of stress in about 35% of homeowners.
You’ve found the perfect home in the perfect neighborhood, and you’ve made an offer that’s been accepted. Before you move on to the home buying process, don’t forget to take a step back and make sure you’re still on track for financial security. The sale of your old home and purchase of your new home may have a huge impact on your finances, so it’s important to review your current financial situation before you proceed.
The following are some general financial tips that you should do after buying a home.
Going Back To Your Budget
Now that you have acquired your home, it is time that you take a look at your budget again. This is an essential move that you shouldn’t skip at all. After all, your house is both an asset and a liability. You have recurring expenses that you need to pay so that you can keep the property. Of course, it includes mortgage payments, as well as costs related to utilities.
You might also need to deal with fees for homeowners’ association and community membership. Repairs and maintenance can also arise the moment the least you expect it. Of course, these expenses can be overwhelming. However, keep in mind that they spell the difference between renting and owning a house. Since you are already a legitimate homeowner, you have no other choice but to accommodate these additional financial loads.
Surely enough, revisiting your budget can help you set your priorities and help you manage your income. You might have to reduce your luxury and non-essential spending at this point to cater to your long-term financial goals.
Getting Enough Insurance
One of the first things every new homeowner needs to consider is insurance. If you buy a home, you’ll need to make sure it’s protected against damage or loss. There are many different types of policies available to choose from, each with its own rules and regulations. When you’re considering what kind of coverage you should get, keep in mind that insurance isn’t a one-size-fits-all solution.
An essential insurance policy that you should get is homeowner insurance. The latter is a type of insurance policy that covers you for damages to your property and any injuries or deaths that happen in your home. It also provides liability coverage for any injuries on your property and even any injuries that occur off your property if someone was at your home. House insurance is typically broken down into three categories: property, liability, and personal belongings.
You also have to get life insurance. In the United States, having enough life insurance to cover your mortgage is a wise investment and not just a safety net in case something happens to you. By making the mortgage payments on a life insurance policy, you can guarantee that your mortgage will get paid, as long as your policy isn’t canceled.
Your life insurance policy should be enough to cover both your mortgage and other living expenses. You also have to decide if you want to get permanent or term life insurance.
If you are a homeowner, you should be thinking about the benefits of disability insurance. It is not a cure-all for every homeowner crisis, but it is a way to protect your home if you become disabled. If you get disabled in the future, chances are, you’ll not be able to make your mortgage payments. As a result, the bank would foreclose on your home. With disability insurance, you get money to pay for your mortgage if you encounter misfortunes.
Checking Your Retirement Plans
When you buy a house, it is essential to set up a retirement plan. Many people do not think about it because it is not the focus of the buying process. They tend to get so focused on the property and the costs that they forget about their future. What you need to do is to take a step back and put everything in perspective.
If you have kids, then it is crucial you are able to retire as well. You need to look into your future and ensure that it is secure. It is not just about your child’s future but also about your own.
Accordingly, roughly 63% of Americans are on their way to retiring broke. Of course, you don’t want to become part of that statistic. Since you are already paying for your house, it is important you visit your employer’s plan to see if they are offering 401(k) or other types of retirement accounts. You can enroll on them and assess your budget if you can make room for increasing the amount of your contributions.