4 Financial Moves to Make After Buying Your First Home

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KEY POINTS

  • Buying a new home comes with new financial obligations beyond just the mortgage.
  • You'll want to make certain you're ready to cover new costs like home maintenance.
  • You might be able to save money on property taxes and homeowners insurance.

Buying a home is just the beginning.

If you have recently become a homeowner for the first time, you are probably already aware you have some new money issues to address. This goes beyond just setting up automated mortgage payments or making sure you send in your checks to your lender each month.

In fact, many aspects of your financial life have changed due to your new purchase, so you should be sure to make these four moves so you're ready to deal with your new reality.

1. Bulk up your emergency fund

As a new homeowner, your primary concern should be with making certain you are able to make your mortgage payments on time every month. If you miss payments, you could be hit with late fees or even risk your lender foreclosing and taking your house. This could be financially devastating.

An emergency fund reduces the likelihood you'll end up missing a payment even if other things go wrong in your life. You should make certain to have enough money in a high-yield savings account so you can cover several months of living expenses -- including your new housing costs.

2. Start a home maintenance fund

One of the biggest changes associated with buying a first home is that you become responsible for maintenance and repairs that were likely previously handled by others, such as your landlord or your parents if you moved out of a family home.

Maintaining your house can be expensive, and you don't want to face surprise costs that end up sending you into debt. You also don't want to put off routine upgrades or fixes and turn little problems into big ones.

To make sure you have the money necessary to cover your ongoing expenses -- as well as big surprise issues that crop up -- set aside around 1% of your home's value each year in a maintenance and repair account. Even if you don't use this money in some years, you'll be ready when a major repair is needed, such as a new roof.

3. Decide if appealing your property taxes makes sense

Property taxes are a big new expense homeowners face. In fact, they can cost more than your mortgage in some cases.

The good news is, appealing your assessment can sometimes lower your tax bill -- but only if you believe your house is assessed higher than it should be. See what your assessment is compared to similar properties that have sold in your area recently to decide if a property tax appeal makes sense.

4. Review your home insurance coverage regularly

Finally, you'll want to make certain you have the right insurance coverage in place at the best price. Typically, this means getting new homeowners insurance quotes each year to make certain no new competitors now offer the same coverage for a more reasonable cost. If things change at your home, such as a new addition or property values going up in your area, it may also be worth reading the details of your policy to make sure you still have the coverage you need.

By taking these four steps, you can avoid surprise expenses that could hurt your finances, and you can protect the investment you've made in your home. Each of them are well worth the effort.

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