Being a homeowner is a pretty significant milestone. It’s not without its challenges though, especially when it comes to financial responsibilities. There are some financial concerns that are especially important for homeowners to keep in mind and stay on top of.
Homeowners insurance technically isn’t a type of insurance you are required to carry, but it’s still a good idea. Homeowners insurance helps cover your home, your property and possessions, and you from being financially responsible for injuries that happen on your property. These problems can be incredibly expensive, so having insurance to help can be valuable. There are different types of homeowners insurance, and they each cover different things. Some are best for homeowners, while others are designed for renters, condo owners, or even those who own mobile homes. Which one works best for you will depend on your situation, so take that into careful consideration when choosing coverage.
Your Home Equity
Your home’s equity is calculated by taking the fair market value of your home and subtracting the amount of money you owe on it from that amount. You can build equity in a number of ways, which will put you in a more secure position. Home equity grows as you pay off your mortgage and if your home increases in value. You can wait for your home’s value to increase. Alternatively, you can take matters into your own hands by doing home improvement projects that will increase your equity by increasing the market value of your home. This can put you in a better position if you are selling your home.
Maintenance costs are another expense homeowners should keep in mind as they plan their budgets. Performing regular home maintenance is essential to keeping your home in good condition and preventing the need for more costly repairs. If you find the prospect of all the maintenance you should have done to be overwhelming, sort the tasks into more manageable segments by assigning them to be done by season or even further by month. When it comes to figuring how much you should be saving for home maintenance costs, plan on somewhere between 1 and 4 percent of your home’s market value.
Being a homeowner comes with additional financial responsibilities. These costs are important to keeping your home protected, in a good financial position, and in proper working order. It is important to keep up with these expenses and be aware of them. Make sure they are included in your budget and spend accordingly.
Read this next for more great tips: Costs in Addition to a Mortgage to Factor into Buying a Home