Becoming a new homeowner can be one of the most exciting experiences in your life but, like with most things, it comes with some major financial downfalls. You may be worried about losing the lifestyle you once had, but you will likely have to cut down on some expenses when you buy your first house.
As you get used to monthly mortgage payments, you may want to skimp on costs that don’t give you an immediate gain. But there are some charges you shouldn’t overlook. Read these four tips to avoid financial disaster.
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1. Rebuild your emergency fund. Buying a house means you will likely spend tens of thousands immediately on a down payment. If you dipped into your emergency fund to come up with the money, you need to rebuild it as soon as possible. It should consist of about three to six months’ income to be adequately prepared for financial disasters, such as a death in the family or a natural disaster.
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2. Don’t put retirement on the back burner. While mortgage payments will be unusual at the start, don’t let the large monthly payments hold all of your attention. Your other financial commitments like retirement savings are still vastly important.
3. Consider paying your mortgage electronically. Nothing is wrong with the old-fashioned way, but paying online will help you avoid hefty late fees. This will also ensure that your credit score doesn’t take a hit from an oversight.
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4. Invest in comprehensive insurance. Make sure you pick homeowners insurance that covers more than the necessities. Look out for options like a higher liability coverage and natural disaster insurance in your plan. And before you commit, make sure that your policy is with a firm that has a good track record with processing claims in a timely fashion.
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