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How to Rebuild Your Finances After Buying a New Home

You just closed escrow on your home and are officially a new homeowner. What a significant moment in your life! Your next step is to get nice furniture for your home and start making it a home, right? Not so fast. Even though you saved all that money to buy your new home, unfortunately, it doesn't end after closing escrow, and your savings mentality needs to stay on and alert. It is easy to get caught up in the happiness of owning a new home, but the truth is, there are priorities for new homeowners, and those are planning for new expenses that come with a home and rebuilding financial savings. Your real estate specialist and your home mortgage specialist can help you understand and prepare for these two crucial aspects of becoming a new homeowner.

Dealing with New Expenses

Buying a new home is a significant accomplishment but also a big challenge, and as a new homeowner, you should be prepared to add to your finances new expenses you did not have before. Elizabeth Renter (2017) explains in her article the importance of understanding the new monthly costs when buying a new home:

  • Homeowner Taxes: Whether the taxes are included in your mortgage payments, or you pay it quarterly to your county, property taxes are mandatory, and they are an added expense.
  • Homeowners Insurance: Home insurance is also a monthly expense required by your lender to protect your property in case of a house fire or other incidents.
  • Homeowners Associations: Many homes are part of home associations, which are responsible for maintaining and taking care of the community, but for a fee. This fee is mandatory for all homeowners.
  • Home Maintenance: Even the newest house on the block requires maintenance. Maintenance services for water softeners, A/C filters, pools, landscapes and water filters are just a few examples of costs that add up to new homeowners monthly.
  • Utilities: If you are a new homeowner that used to live in an apartment, you will notice that your utility bills will increase. In number and amount.
  • Security Systems: Many homeowners opt for having a security system installed in their homes. These services also become an added monthly cost.
  • Home Repairs: Even the newest home can have problems and need Repairs. When houses a newly built, they usually come with a one-year warranty from the builder, but after that warranty expires, homeowners should look for a home warranty plan that can cover significant home systems' repairs like plumbing and air conditioning. Of course, this plan will also become a monthly cost.

Planning to Rebuild Your Finances

It is essential that you start planning your finances as soon as you close escrow and receive the keys to your house. In general, most new homeowners use most of their savings and sometimes even borrow from family and friends to be able to buy a home, and that is okay. However, any unexpected expense that comes up after buying a house can become an emergency expense. According to Nikki Trionfo (2016), there are a few points you can concentrate on to help you stay focused and rebuild your finances:

  • Prioritize: It is crucial to make a priority the rebuilding of your emergency savings.
  • Commit: Commit with your family to freeze, for one year, spending money on unnecessary expenses.
  • Look for Deals: Try to save on necessary regular expenses, by always looking for the best price and using coupons.
  • Control: Control expenses on entertainment and travel to a minimum for one year.
  • Avoid New Debt: Avoid getting into new debt at all costs including buying things for the house in your credit card.
  • Wait to Start Decorating: Home decor can quickly deplete your savings or even worse if you charge expenses for decoration to your credit card. Remember your priorities.
  • The Equity on Your House: Remember that letting your house to build equity is also a great way to invest in your future.

As a smart new homeowner, being financially prepared is the right path to take. Life happens and so do many unexpected expenses. As a new homeowner, you should think of situations like losing your job, becoming ill, your car breaking and so many other scenarios that will require you to have your savings available. Carefully planning your expenses and rebuilding your savings is the smart thing to do as a new homeowner.

At American Mortgage Resource, Inc. we want to educate and help you as our client, so you can understand the significant step that it is to buy a home and support every step in the buying process until the home is yours. Give us a call today. Let us help you with this important decision you are making.

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References

Trionfo, Nikki. (July 6, 2016.). 7 Financial Tips You Never Thought of After Buying a Home. 

Renter, Elizabeth. (July 21, 2017.). Budgeting for New Homeowners: Plan for Additional Expenses.

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