5 Smart Finance Tips for New Homeowners

You are going to learn so much during your first year as a homeowner. From learning how to budget for repairs to solving problems related to your air conditioning or dishwasher, there is so much to know about buying a home. Fortunately, you don’t have to learn these lessons the hard way. Follow these five financial tips to help you save money and make smart choices.

1. Shop around to get the best home loan.

Many people receive offers from their existing financial institutions for home loans and other discounted financing options. Your bank or your credit card providers act like they have the best deals for you, but they might not have your best interests in mind. Their job is to keep you as a client first and grow your business with their brands.

Shop around to find the best variable home loan rates in your area. As a rule of thumb, check with at least three different financial providers to get an idea of your expected monthly payment and interest rate before you make a decision. This could save you hundreds in fees and help you budget your mortgage better.

2. Determine how long you want to pay off your home.

As you shop around for a home equity loan, take time to understand the different factors that go into each offer. While you may be tempted to pick a mortgage with a low monthly payment, the life of the loan might be much longer than you want. It may be in your best interest to opt for a shorter mortgage at a higher payment.

3. Check the annual percentage rate.

The annual percentage rate (APR) is another factor that can impact how much you pay for your mortgage. An interest rate is the starting point for a mortgage rate loan, but an APR paints a more realistic view of your costs because it includes all of the fees associated with a lender. A high APR could cost your hundreds of dollars more than you expect.

When you know what an APR covers, you can find the best rate for your home loan with the right monthly payment.

4. Set a monthly budget for repairs.

Even if you buy a brand new house in top condition, you are going to have repairs. It’s natural for things to break over time and you have to contend with the elements like lightning strikes or wind damage. As a rule of thumb, you should set an annual maintenance budget that is one to four percent of the value of your house. If you paid $300,000 for your home, you should set aside $3,000 – $12,000 ($250 – $1,000 monthly) for repairs. This ensures that you always have money tucked away in case disaster strikes.


5. Choose one improvement project each year.

If you don’t use your repairs budget, you can re-invest the money into your home to increase its resale value. Certain projects like installing solar panels or replacing an aging roof can make your home more desirable when you decide to sell it. By doing these projects over time, you can pace yourself and reduce your stress levels as a homeowner.

For example, you may decide to replace your garage floor coating with a new epoxy that reseals it to keep moisture out. Getting a new garage floor can protect your car and create a positive first impression for new buyers. This could be one of the big projects you choose.

While owning a home can seem stressful at first, the rewards of investing in a property that belongs to you are worth it. Whether you are picking out garage floor epoxy or refinancing your home loan, you are building a healthy financial future.

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