Four steps to sensible home ownership
The sale is complete, move-in date was a success and furniture is in place. Now what? For many homeowners the hard work begins after the house has become a home — adjusting to mortgage payments, operating costs and ongoing maintenance. However, knowledge is power and a little preparation can go a long way. Following these four steps can keep your new dream home from turning into a nightmare.
MAKE YOUR MORTGAGE PAYMENTS PROMPTLY
Whether you decided to make mortgage payments weekly, biweekly or monthly, make sure to pay on time to avoid delinquency, which can have adverse long-term effects. Delinquency could result in late charges or negatively affect your credit rating, and failing to make payments completely can result in serious consequences like foreclosure.
Setting up automatic deductions from your bank account is the best way to prevent late or missed payments. Finance experts also recommended keeping at least three months’ worth of mortgage payments in savings for emergency situations. If you have trouble making payments, discuss the situation with your lender or a financial professional before it spirals out of control.
BUDGET PROPERLY AND LIVE WITHIN YOUR MEANS
Home ownership includes a number of hidden costs, including property taxes and insurance, as well as maintenance and repair costs. Additional costs can include home security systems, snow removal or gardening. Make sure you budget accordingly. Identifying all of the costs associated with a home can help reduce stress and prevent surprises.
Sticking to your budget can provide peace of mind that money can’t buy. Part of that involves living within your means, and avoiding costly home renovations or upgrades until you’re on solid financial ground. Adding a Jacuzzi to the master bathroom or backyard deck might be appealing, but overextending yourself and bursting your budget could cause headaches down the road.
SET MONEY ASIDE FOR EMERGENCIES
Whether you do it yourself or bring in an expert, repairs are a costly side-effect of home ownership. As your home ages, major repairs or replacements to the siding, windows or rooftops are an unfortunate reality. Rely on an expert to help identify problem areas. Knowing about repairs or replacements in advance can help you prepare for them and budget appropriately.
However, many home repairs are unexpected, and the costs associated with them can put a sizable dent in your pocketbook. Establish an emergency fund to deal with unexpected issues ranging from home or car repairs to illness and job loss. Setting aside five per cent of your monthly earnings in a special account can bail you out when unexpected problems pop up.
CONDUCT REGULAR HOME MAINTENANCE
Maintenance and renovations are just part of the homeowner package. Learn about your home’s basic components and operating systems (heat, water, electricity, etc.) and identify actions you have to take to adjust them or shut them off in an emergency. As the old saying goes, “an ounce of prevention is worth a pound of cure,” and failure to do so can have serious ramifications.
Conduct home inspections regularly, and replace or repair items that are worn out. Maintenance can range from simple tasks (replacing smoke detector batteries, cleaning out gutters, lubricating door hinges) to major projects (replacing water heater, patching up an aging roof, chimney cleaning), so educate yourself and keep home maintenance in mind.