If you’re a first-time homeowner, congratulations!
Everyone saving up for a home during this time knows it’s not a walk in the park. It takes a lot of effort to improve your credit score, find the right home, apply for a mortgage loan, and manage all the paperwork that comes with buying your first home.
It’s truly an accomplishment, but it’s important not to ease up on your financial planning and saving practices. In fact, it’s a sign for you to reassess your finances and consider the new responsibilities of becoming a homeowner. Keep reading for five financial tips first-time homeowners must know.
Top Financial Tips for First-Time Homeowners
Owning a home for the first time is an exciting milestone. But you must remember not to let the excitement take over your ability to separate wants versus needs and stay financially healthy. Here are some key things to keep in mind as a first-time homeowner.
Review your Financial Plan and Budgets
If you’re a new homeowner, then there’s a chance that you’ve taken out a mortgage to purchase your new residence. That means you have a loan to pay off for the next five to thirty years. And that’s on top of your daily living expenses.
Unless you’re part of the top population with almost unlimited financial resources, you will need to reassess your financial plan and make some budget arrangements. Make sure to identify your wants and needs, with the needs being the top priority.
Set a Budget for Home Furnishings
A new home will need brand-new furniture and décor, right? Not exactly. While interior decorating can be fun, your expenses can add up if not kept in check.
It’s best to work out a budget for furnishing your home. Setting a budget and sticking to it means avoiding debt and future headaches. Identify which items are essential or non-negotiable and which ones you can save up for.
Don’t be afraid to look into various deals online or in your community. You can also consider checking out vintage or charity shops for secondhand or pre-loved items. If you invest enough time in finding them, these items can add even more character to your new home while saving you money.
Maintain a Good Credit Score
Even if your credit score was good enough to be granted a home loan, you should still work on maintaining (or improving!) it. One way to do so is to meet your mortgage payment deadlines. Home loans are the primary source of debt for most people, so a missed payment can significantly affect your credit score.
An excellent way to improve or maintain a good credit score is to ensure you pay off your credit card debt. It’s essential to pay them off promptly. Not doing so can incur penalties and negatively affect your credit score.
Remember that even if you’ve already been approved for a home loan, keeping the good financial practices that got you a good credit score is still crucial. You’ll still need it, especially when you have other personal and financial goals you want to reach.
Consider the Costs of Moving In
Whether moving to your new home from an apartment you used to rent or your family home, you’ll need some help. Knowing how much you’ll need before you move before the actual move is crucial.
As you can see, planning ahead is a key factor in staying financially healthy. Moving essentials typically include packing materials, cleaning supplies, and a moving truck. But the actual total cost of moving may vary per person or family.
It can also depend on how far you’ll be moving from your current location, so consider those factors when calculating the budget for your moving costs.
Save for a Rainy Day (or a Leaky Drain Pipe)
Being a homeowner is quite different from renting a room or apartment. You’re responsible for finding help and covering the expenses you need for any repairs. With a new expense—mortgage payments—taking up most of your income, it can be easy to overlook the other costs you need to cover as a homeowner.
But now that you’re fully responsible for your home, it’s even more important to set aside money for repairs, insurance coverage, and potential upgrades.
Hopefully, the above five tips can help make your journey as a new homeowner easier to navigate. And if you want to ensure you’ve got all the bases covered, consider consulting with a financial coach. Working with one allows you to gain expert advice on the best financial practices while considering your financial needs and goals.
Are you in the market for your first home? Check out this ultimate guide to help you easily buy your first home.