Being a first time homeowner is an exhilarating feeling, and owning your own home does come with a lot of perks. Yet, with many perks comes lots of responsibility. Here are 5 steps that you should take as a new homeowner in terms of your finances, so that you can stay on top of your ownership game!
Don't Overspend
In the excitement of owning your first home, you will be tempted to buy the “perfect” furniture, or remodel certain areas to make them unique to you. While this is completely okay, don't go on a spending spree to change and improve many aspects of your home. Remember that you’ve just spent a lot of your savings to close on your new home, and depleting your savings further is not the smartest idea for new homeowners. Renovating and remodeling to a point that it jeopardizes your status as a homeowner because you aren't able to make your payments on time just defeats the purpose of having your own home in the first place!
Get Proper Insurance
If you think homeowners insurance is the only type of insurance you will need to purchase, then you’re in for a surprise. If you share your home with anyone (wife, child etc.) who relies on your income to help pay the mortgage, then you’ll need life insurance, so that they don’t lose the home in case you die unexpectedly. You’ll also need disability-income insurance to replace your income in the dire circumstance that you become disabled and cannot work. Without an income, you won’t be able to pay your mortgage and that would lead to further complications. Once you own a home, you have much more to lose in case of a lawsuit. Due to this, you should make sure you have excellent car insurance coverage, so that in case of a car accident lawsuit against you, you won’t have to pay the collateral with your home. An umbrella policy that picks up where other policies leave off is a good idea, and can help keep your home secure.
Get Help with Tax Returns
You probably hate the idea of spending more money on an accountant after you’ve spent a load on buying the house. Still, hiring an accountant is integral to make sure you file your taxes correctly and maximize your refund. Home ownership changes tax situations significantly, in ways that you yourself might not be aware of if you try to file independently. Sometimes, if you are in a state with high property taxes, you might need to get a property tax loan to tide you over. Also, certain home modifications (like installing solar panels for example) may make you eligible for certain tax credits. Your tax accountant can give you a better idea about these, help you figure out what to do in case you’re running low on money, and claim the right deductions especially if this is your first time filing taxes as a homeowner.
Save for Unexpected Expenses
Because these will happen. Your dishwasher may break, your plumbing may go awry, and there’s nothing you can do to stop these sorts of unexpected problems. What you can do is make sure to set some cash aside in the event that something goes wrong and needs fixing. Just because you’ve made your mortgage payment on schedule, don’t go crazy spending the rest of your money till your next paycheck. Whether in terms of home ownership or life in general, always be sure to save for a rainy day.
Keep a Record of Everything
Keeping records is a skill that is absolutely essential as a homeowner. Every improvement you make to your home, whether small or big, will increase its resale value. Obviously, you have to be able to show for the improvements and such, and so it’s integral you keep receipts and records of everything right from the start. When you sell your home, this will help you maximize your tax-free earnings! If paper records and storage cabinets aren't your thing, then keeping legitimate digital copies works fine too - just make sure you have some sort of organizational system for your records so as to easily navigate through them in the future, and get your money’s worth.
Home ownership comes with a lot of responsibility and may at first seem too much to handle. Ultimately though, as long as you have a system in place, having somewhere to truly call your own is one of the most rewarding feelings ever!
