Finding and purchasing your home can be an exciting and overwhelming process. You may be relieved once you finally take possession of your new home, the financial responsibilities of homeownership are just beginning.
Here are 4 money issues to watch for after you buy your home:
1. Make your mortgage payments on time
Whether they’re monthly, biweekly, or weekly, always make your mortgage payments on time. Making late payments may result in late charges and negatively affect your credit rating. It can even lead to more serious consequences like foreclosure.
One trick to prevent late payments is to have the amount automatically deducted from your account every month and to put at least 3 months’ worth of mortgage payments in savings for emergency situations. If you’re having trouble making payments, discuss the situation with your lender.
2. Costs of operating a home
Besides your mortgage, property taxes, and insurance, there are many ongoing costs related to operating your home. They include maintenance, repair, services (such as a security alarm, snow removal, and gardening). If you have a condo or strata, some of these expenses may be included as part of your monthly maintenance fee.
3. Saving for emergencies
Even if you know how to do repairs yourself, there are costs involved. Every building has a life cycle, which means that all parts of a building age and require major repairs or replacement at some point. For example, you might know that your roof will have to be replaced in a few years simply because of its age. Repairs like these are expected and can be planned for. However, many repairs are unexpected and can sometimes be costly.
Set aside an emergency fund to deal with unexpected problems ranging from major repairs to illness and job loss. A good guideline is saving 5% of your take-home pay and putting it in a special account.
4. Living within your budget
Prepare a monthly budget and stick to it. You should monitor your spending every month and evaluate your progress in meeting your financial goals. If you continue to spend more than you bring in, find ways to cut back. If you’re having trouble sticking to your budget, don’t hesitate to ask a professional money manager for help.