Buying your first home is a huge accomplishment—it’s also a huge financial responsibility. If you’re a first-time homebuyer, you should read these financial tips right away.
1. Understand Your Insurance Coverage
You should learn exactly what your insurance can and can’t do for you as a homeowner.
As a new homebuyer, you’ve had to sign up for home owners’ insurance. This type of insurance offers coverage for household damages and losses from disasters like storms and fires. It can also offer you liability protection in case someone gets injured on your property.
Your homeowner’s insurance won’t cover every type of damage. There are plenty of exemptions from the standard plan. These are some typical situations where damages won’t have coverage:
- Wear and tear
Your mortgage lender might have asked you to sign up for mortgage insurance. Mortgage insurance offers you no protection as a borrower. It’s meant to protect the lender.
You may want to sign up for disability income insurance after buying a home. Why? Disability income insurance can supplement your income if you ever become disabled and can’t work. You could use it to cover your mortgage payments in this difficult scenario.
2. Start an Emergency Fund
You should also have a substantial emergency fund set up in a savings account. With an emergency fund, you can handle emergency home repairs and services out of pocket. You can also rely on your emergency fund to pay for essentials when your regular income is disrupted. So, if you lose your job, you can still make your next mortgage payment.
What if you don’t have enough in your emergency fund? If you’re dealing with a small emergency repair, you could apply for an online loan as a solution. If you’re approved for the loan, you could use the borrowed funds to cover the urgent expense and move forward.
Be sure to search for an online loan that’s available in your home state. So, if you live in Missouri, you’ll want to find online loans in Missouri — this way, you won’t waste any time looking through loan applications that aren’t accessible in your state. When it comes to emergencies, time is of the essence.
3. Pay On Time
Paying your mortgage on time should be your top priority. Set reminders in your personal calendar so that the payments don’t slip your mind. Better yet — automate payments through your online banking so that the funds come out of your account whenever your payment is due.
You do not want to miss a mortgage payment. Missing one will result in a late fee, and it will lower your credit score. Missing several mortgage payments could lead to foreclosure.
If you ever think you’re going to miss an upcoming mortgage payment, contact your lender right away. They may waive late fees, forgive the late payment or allow you to apply for a mortgage deferral. Any of these options will help you recover from this financial misstep.
If your personal finances ever take a rough turn and you’re nervous about foreclosure, the U.S. Department of Housing and Urban Development has programs that can help you. Do not go to a for-profit company for foreclosure prevention—this often costs more than a mortgage payment.
These tips will help you manage some of the biggest financial obstacles that come with owning a house. Follow them!