We’re back with our special, “Buying in the Roaring ‘20s!” All about making your dreams come true in 2020, by buying a home of your very own.
In our first hour we offered up five New Year’s resolutions to help you get the house. From your credit, to your savings, to discussing the process with your REALTOR®. And now we’re going to fast forward to the point at which you actually own that new home. With five resolutions to help you comfortably afford the house, and help you grow its value over time.
Resolution number one: I will make a budget and stick to it.
This is a really important step. Because to comfortably afford a home, you have to know how much money is coming in, and how much is going out. A household budget can help you do that. Now, if you know Excel you can certainly create your own spreadsheet. Or you can go online and find templates for household budgets. Either way, a budget will help you keep track of all your housing costs, your groceries, your gas, your clothes, your entertainment, and everything else. And once you know exactly how much money you will need every month, well, that brings us to our next resolution.
Homeowners resolution number 2. I will try to save up around 6 months worth of expenses…. And once I do I will leave that money alone. That’s a really solid plan. Because If you have money in your savings account, you’ll be OK if you lose your job, or you face sudden, big, unexpected expenses. It’s always good to have a buffer, so that if you do have to leave one job and find another one, you’ll still be able to pay your mortgage, still be able to keep your car gassed up, and still be able to even buy a new set of clothes for that job interview. And speaking of savings…….
Homeowners resolution number three. I will save up for household maintenance. You know, this is one area that quite often surprises homeowners. They’re following their budget, they’re paying their bills, and then all of a sudden…they need a new hot water heater. Or a new refrigerator. Or they need to have the flashing repaired on their roof. Those expenses ideally should not come as a surprise. So the idea is to put away between 1 and 2% of your home’s value every year, and use that money for household maintenance. That’s a tried-and-true formula, to help you keep your house in Tip-Top shape, without being caught off guard. After all, houses just need proper maintenance. And a well-maintained home is more valuable then a poorly-maintained home. So keeping your house in great shape? That’s a way to protect your biggest investment.
Okay now….homeowners resolution number four. I will not dip into my equity. This is really important. Because yes, over time, homes typically appreciate in value. And that, combined with paying down your mortgage every month, can result in substantial equity in the house. The expert advice? Hold on to it! Don’t treat your equity like an ATM, pulling money out anytime you see something you want to buy. And that includes paying off your car loans. Because when you do that you’re turning a three or four year car loan into a 30-year car loan. Instead, let that equity build up, undisturbed. Remember your equity represents a big part of your overall wealth. And if you blow it, well, it’s gone. So be very careful with your household equity. Now are hey things you can use it for? Of course. College education? Sure. Medical expenses? Sure. The down payment on your next house? Absolutely. But try not to use it for that new 4K big-screen TV you have your eye on. That’s not a great idea.
Okay and resolution number five for homeowners… I will stay in touch with my REALTOR®. Your REALTOR® is there to help, whether or not you’re doing a transaction. They can help you find out what your home is worth, and what other homeowners in the area are doing with their homes. It’s always good to know how much your house is worth. And your REALTOR® will be glad to help you find that out, by putting together a comparative market analysis for your property. They can also tell you which household designs are trending in your neighborhood. That could help you decide which direction to go in, if you decide to make improvements to your home. Oh and by the way if you do decide to put in some upgrades? Your REALTOR® will know also some good contractors in the area. So it’s a really good idea to stay in touch.
So there we have it 5 resolutions for a new homeowner. It’s exciting, when you think that you’ll have a brand new house one that you own yourself in this brand new year. And if that’s you, and you make the jump into home ownership in 2020 congratulations. And, welcome home.