If you’re buying a house, furniture and decorations may top your list of things to pick up from the store. But although these items are important in creating a nice cozy feel, these aren’t the only things to worry about when purchasing a new place. Important actions must be made to ensure that you are financially secure after the purchase. Whether it’s looking at a life insurance guide or preparing for a rainy day, these three things can come in handy when buying a house.
1. Home warranty
A homeowner’s insurance policy is required by most banks, and these policies protect against theft, fire and many other problems that affect your property. But don’t stop here. Like most people, buying a house probably drained your personal savings. Closing costs and a down payment can take a chunk of your money, and if you don’t have a lot of cash in the bank, extra expenses with your new house can create a financial burden.
For this matter, consider the importance of buying a home warranty for your house. If an appliance breaks, you experience plumbing problems, or have issues with you HVAC unit, call your home warranty company and they’ll send a technician to your home. The service fee is only $50 to $75 depending on the company. And the best part, if the technician can’t fix the problem, they’ll replace the broken item. A typical home warranty averages $400 to $500 a year.
2. Emergency savings
While preparing to buy a house, saving money was no doubt a priority. This is how you were able to afford your down payment and closing costs. But just because you completed the home buying process doesn’t mean you should stop saving your money. Unlike renting, you are responsible for any repairs. If the attic leaks or your hot water heater breaks, there’s no landlord to call. For this reason alone, you need cash in an emergency reserve.
It’ll probably take a few months to adjust to your new expenses. Once you’re back in the swing of things, start putting money aside – maybe 10% of each paycheck. This way, you don’t have to pull out your credit card or use bill money to fix things around your house.
3. Life insurance
If your spouse depends on your income to pay the mortgage each month, you need a life insurance policy.
Sadly, some people underestimate the importance of a life insurance policy, or purchase too little coverage. There are no hard and fast rules on how much coverage to purchase. However, you should get enough coverage to cover your funeral and burial, and any debts, such as your mortgage. Just imagine how a paid off mortgage can relieve your family’s worries.
Buying a home is a major milestone, and you should be proud of your accomplishment. Unfortunately, buying a house can trigger a bunch of new expenses. Only by preparing for these expenses can you keep your head above water and enjoy homeownership.