Top 10 Homeownership Tips
by Carese Busby
The new year is here and it’s time to think about getting into financial shape. Whether you are a homeowner or considering buying a home in future, here are some tips that can make a big impact on your financial future.
Change From Monthly to Bi-Weekly
You may be surprised to discover what a big difference two weeks can make over the life of your home loan. Bi-weekly payments instead of once per month allow you to make 13 payments in a year instead of 12 payments. Believe it or not, paying your mortgage every two weeks can trim up to 6 years off your 30-year mortgage.
Credit is King
Review your credit report each year by going to www.annualcreditreport.com. Your credit worthiness is a very important part of your financial picture when it comes to obtaining a home loan. There are three “C’s” of lending: Credit, Collateral, and Character. Your credit report is an indicator of two of those three “C’s”. Check your credit report yearly for any inaccurate or derogatory items that need to be updated or resolved. Derogatory credit can present challenges when applying for some home loans and consumer credit. Credit issues can take time to resolve so best to review it on a regular basis as timing is everything in finances.
If you go paperless with your mortgage statements, make sure you sign up for electronic alerts of your statements and other important documents so that you don’t miss out on any time sensitive notifications and/or changes to your mortgage account.
Know where you are spending your money. You can find some great budgeting tools online to help you meet your financial goals. There are numerous websites and apps that can make it easy to track your money www.gnucash.org www.mint.com
Find Your Comfort
Becoming a homeowner is very exciting but the added expenses of homeownership make it very important to determine the target monthly payment range that you are comfortable with. Many times, the comfortable monthly payment is actually less than your qualifying purchase price range for you to stay within when you go shopping for a home. You don’t want to wind up house poor living in your home and unable to afford to go out and live your lifestyle.
Automate Your Expenses
Setting up automatic payments for your monthly bills can take the guesswork out of making sure your payments are received on time, especially for those creditors that report to the credit bureaus. Even one late payment can adversely affect your credit score and in this busy world that we live in, it is helpful to not have to think about one more thing.
Build up a savings account so that you have 6-12 months equivalent of expenses set aside for a rainy day fund. This will come in handy in the event of a job layoff or another unexpected financial setback and buy you time to strategize and make sound decisions.
Home Savings Account
A home requires regular maintenance. Set up a dedicated fund for maintenance and repair expenses so you’re not caught off guard when the roof needs to be replaced or the unexpected occurs. It is also a recommended to follow a home maintenance calendar checklist to anticipate upcoming repairs and expenses. There are several websites and apps available to help you stay on track of routing home maintenance. Here a couple of websites I find to be helpful: Lowes Home Maintenance, Schedule and Checklist and Martha Stewart checklists
To CPA or not CPA
If you own a home or are planning to become a homeowner, hire a CPA to assist you with your taxes. With constant changes in the tax code and numerous home-related deductions, it can be challenging for everyday folks to stay current on tax law. CPAs are professionals whose expertise is the tax code and helping you with tax strategy to maximize your allowable tax deductions. A CPA can save you money and help you avoid costly mistakes and audits.
The Big Picture
It’s a myth that you need to have a certain level of wealth in order to have a financial adviser. If you own a home or are planning to buy a home, working with a financial advisor is recommended. A home is a significant investment and can account for a large portion of your overall financial portfolio. Your financial adviser will help you with the big financial picture and counsel you on overall financial strategy to help you get on the right path to meet your financial goals.