Financially speaking, buying a home is a big deal. You’re making an important investment in your future. But owning a home often means more financial responsibilities, especially if you want to save up for future goals like retirement, vacations, or your children’s college educations.
Want to make sure you keep your finances on track after buying a home?
Take these six steps to do it:
This one’s critical. Homeownership comes with a lot of costs, and if you want to be sure you have the funds to pay for those, you’ll need a budget in place to control your spending.
Take a look at how much money you have coming in, and then write down all the different costs you have each month — things like your mortgage payment, insurance, utility bills, and even little things like your gas and groceries.
Set a budget for each one, and check-in at the end of the month to ensure you’ve stayed on track.
You can also use various budgeting apps like Mvelopes, Mint, Acorns, and more to manage your money on the go.
Once you own a home, you never know what unexpected costs might crop up. One month you might have to replace the air filters, and the next month it could be the roof — a considerably more significant chunk of change.
If you want to be sure you can handle those sudden costs without breaking the bank, you’ll need an emergency fund to pull from.
Most experts recommend having at least three to six months of household expenses saved up — meaning enough to cover all your bills for that period. This would help in a worst-case scenario situation (say you lost your job, for example).
Your credit score often drops after buying a house. It’s all normal and nothing to worry about, but you should still check your score just to know where you stand.
Keep it in mind as you go about your new responsibilities as a homeowner, and commit to paying all your bills on time, every time. This will likely help your score rebound within a few months.
You should also avoid taking out any new debt or racking up credit card balances in the meantime. This might only hurt your credit score further.
While most VA buyers purchase with $0 down, you might have spent some cash upfront to pay for the appraisal, the home inspection and other closing costs. Now, it’s time to build those savings back up.
To do this, you’ll need to look back at that budget you created to see how much you can stow away each month. Ideally, you should put the funds in a high-yield savings account. Keep in mind this should be separate from your emergency fund.
You want alternative savings to pull from if you have medical bills or just want to go on vacation.
Whether it’s a big tax refund or a hefty bonus at work, consider paying down your principal loan balance anytime you come into a windfall.
This will mean paying off your loan sooner and with less in interest costs over the long haul. It also might help you cancel your mortgage insurance faster.
You might want to update these items (or go out and get them in the first place) following a home purchase. Check with life insurance firms and be sure to shop around for life insurance policies. A local estate planning attorney should be able to help you with a will.
Good financial habits are critical — but especially when you’re a homeowner.
Download a budgeting app, get your savings and emergency fund in order, and make every effort to pay down that mortgage sooner rather than later. Your bank account will thank you for it.