OK, that new home is all yours at last. So, what happens next? Well, if living happily ever is another one of your goals, here are five things to expect after you’ve bought the house.
1. Take Stock Once You’re Settled
You got your homeowners insurance quotes and chose the coverage you were advised you’d need before you bought the house. But to make sure you remain covered adequately, conduct a photographic inventory all the valuables in your home to make recovery easier should something untoward happen. Remember to update it as you acquire more items and keep a backup file of the images on your phone—as well as in a secondary location (like your office). That way, if something happens to the file at home, you’ll have backups.
2. Manage Your Mortgage
Your mortgage payment will include a line item for “PMI” if your down payment was less than 20 percent of your home’s purchase price. This is private mortgage insurance and it can add as much as one percent to your interest rate. This number might sound trivial, but it can be hundreds of dollars, depending upon the amount you borrowed. Getting rid of this as soon as you can should be your first financial goal. Make extra payments marked ‘For Principal Only” to reduce your outstanding balance more quickly. Petition to get the PMI rescinded as soon as your mortgage balance is less than 80 percent of the value of the home. In fact, many financial experts recommend forestalling contributions to savings accounts until this is accomplished. The logic is the savings over time will amount to more than you could’ve made in interest from a savings account. If you don’t have PMI, principal only payments will help you pay your mortgage off sooner, saving you cash on interest payments.
3. Set Aside an Emergency Fund
Owning vs. renting comes with one very significant difference. When it’s yours, you’re responsible for all repairs and maintenance. This means if something goes sideways you’ll pay out of pocket to put it straight. Houses are comprised of a lot of systems, many of which have moving parts capable of wearing out. Start putting away cash for an emergency fund to avoid going farther into debt if something big goes bad.
4. Plan Your Estate
In most states, your spouse gets right of survivorship for the house. The benefit of your life insurance policy should be sufficient to pay off the mortgage. But what if you both go simultaneously? Who gets the house then? What if your child(ren) are young? Who’ll look after them until they come of age? The sooner you plan these things out, the sooner you can get to living happily ever after.
5. Additional Insurance Coverage
Once you’ve bought a home, you’ll find you’ll need more than just homeowners insurance quotes, you’ll need life insurance, car insurance and a variety of other coverages. Let CoverHound help you find the best policies at the best prices today.