Being a successful homeowner
You're in! You've got new keys – house keys!
Becoming a homeowner is exciting, but it's a lot of responsibility and hard work. In this section of the site, you'll learn more of what you can expect after you purchase your home.
When you sign your mortgage at closing, you pledge your home as security for your loan. You have a responsibility to make sure your property keeps its value as collateral for your loan. And, you'll want to maintain your home so it remains a good investment for you.
Every homeowner will eventually be faced with expenses for unexpected repairs and routine maintenance. You'll need to learn about your home's mechanical systems and construction (and what it will cost to maintain them) so you can budget for their upkeep. Repairs that occur after you sign the closing documents are generally not the previous homeowners' responsibility.
In addition to the cost of future maintenance, there may be some initial expenses that you may not have thought about, such as:
- Lawn and garden equipment
- Snow removal equipment
- Pest control
- Power tools
- Trash cans
- Charges for sewer, water and/or trash collection
Finally, there are likely to be projects that you will want to take on to improve your new home. All of these expenses – in addition to your new mortgage payment – require you to budget and save faithfully. Continuing to fill out your Monthly Spending Planner will help you plan and save for home improvements and repairs.
What to do first? This decision can be difficult for first-time homeowners. It's tempting to make cosmetic improvements, like installing new wallpaper or carpeting, because these changes are the most visible.
But part of the responsibility of owning a home is prioritizing your projects and considering the improvements that are likely to increase your home's value, or decrease your expenses.
For example, it may be better to replace an aging oil furnace with an energy-efficient gas furnace before you purchase new carpeting for the living room. You'll need to anticipate and budget for serious issues that may arise, like a leaking roof or a dying water heater, that will be more important than cosmetic improvements.
The best way to anticipate problems is to inspect your home regularly and perform certain routine maintenance tasks. Refer to the Home Maintenance Checklist for the items you should inspect. It also identifies some specific maintenance tasks that should be performed and how often you should do them.
If you have the skills to do some or all of this work yourself, you will still need to budget for any tools or materials that you will need. If you're not especially handy, you can use this checklist to predict the work that will need to be done so that you can also budget enough to hire someone to do it.
You can save money by learning to do basic home repairs. Home repair courses are usually offered through public school adult education classes, local technical colleges, university extension programs or nonprofit organizations.
There probably will be instances where you will need to employ a carpenter, plumber, electrician, appliance repairman or heating/cooling contractor. Ask family, friends and neighbors for references. Interview three or four contractors from each trade. Compare experience, prices, policies, personality and availability. While price will certainly be a consideration, it should not be the sole factor for selecting a contractor.
As a requirement of your mortgage loan, you obtained homeowners insurance.
In some cases, lenders will escrow money from your mortgage payment each month to cover the annual renewal of your homeowners insurance premium. However, if your lender does not set aside money to renew your homeowners insurance, you will have to budget and save for it on your own.
You'll want to occasionally review your coverage levels to make sure your home is adequately protected.
No one purchasing a home wants to think about losing that home. But the reality is that recessions, layoffs, illnesses, injuries or deaths could dramatically affect anyone's financial picture with little or no warning.
Once you own a home, you have an investment to protect. After all, you've put money down and you have made your mortgage payments each month. The best way to protect that investment is to continue to budget and save.
Experts suggest that you build a reserve of three to six months' living expenses. You can't save this much money overnight, but you should make it your goal to establish such a reserve as soon as possible once you own a home.
It is very important to continue to keep a budget once you own a home. Keep using the Monthly Spending Planner, especially if there is a change in your financial situation. Monitor your monthly bills and use credit cards wisely.
If you do experience unexpected financial difficulty, don't be afraid to ask for help. The worst thing you can do is wait until you are so far behind on all your payments that your creditors resort to collection agencies.
By contacting your creditors right away, you may be able to make lower payments temporarily, until you get back on your feet. You can also contact a professional financial counselor or a credit- and budget-counseling agency if you need help developing a budget/debt reduction plan.
If you are unable to make your monthly mortgage payment, the best thing you can do is to contact your lender. Many lenders will work with borrowers who have a good payment history to arrange a temporarily reduced payment plan until they get back on their feet.