Homeownership Preparation Tips
When you rent, you typically pay only your rent and some utilities. But when you own, you pay for everything. Besides the mortgage, you’re responsible for paying property taxes and insurance, all the utilities, plus the costs of updates, furnishings, and repairs/replacement. This comes as a surprise to many first-time homebuyers, but it can catch those with home buying experience off guard too.
Costs associated with older homes are generally the highest, considering that many of the home’s major appliances and heating/cooling systems may soon need replacement. Hopefully you put together a budget for this type of home-related expense well before you started home shopping. If you didn’t, now’s the time to start saving so you’re prepared for that emergency, whenever it should arise.
If you purchased or plan to purchase a new or newer home, you may not need to budget for replacement costs, as most appliances and mechanical items may still be under warranty. If and how long they’re under warranty is something you should find out well in advance. But you do need money to handle minor repairs, plus the costs of furniture and some decorating.
If the home you’re buying is older, pay very close attention to what’s written in your home inspection report. This report will tell you the age and condition of the home’s roof, major systems, appliances, pool filter and more. Replacement costs for any of these are high, so it’s important to know how soon you should anticipate their replacement.
More than an inconvenience, home repairs are costly. If you plan on owning a home, you need to be prepared because as sure as the sun will shine, the day will come when you’ll need to repair, upgrade or replace something. Some projects will cost hundreds of dollars, others thousands. If you don’t have much money set aside, you’ll need to obtain financing. You may qualify for a second mortgage, a home equity loan, a line of credit or something else. There are pros and cons associated with each and different qualifying criteria so make time to gather pertinent information now before an emergency strikes.
But wait, there’s more! The day may come when you’re without an income due to illness or loss of employment. Regardless of your situation, you’re still responsible for making mortgage payments. Be sure to budget and plan for this unpredictable life event too!