Buying a new home is an exciting time, but don’t let the thrill of owning your own home cause you to make costly mistakes.
Especially with first-time homeowners, expenses creep up with the responsibilities of owning a home. Adding to a mortgage payment, you have property taxes, homeowners association fees, repairs and maintenance and so on. It’s easy to see budgets pushed to the limit.
Here are 5 common, costly mistakes new homeowners make and how you can avoid them.
Not Shopping Around For Insurance
Many new home buyers will get insured through recommendations by their Realtor or from others without shopping around. This can be a mistake as rates and coverage vary from insurer to insurer and with some time you may find you can pay up to 30% less in premiums, which over time is a quite lot of money.
Overspending on Furniture & Remodeling
Most first-time homeowners have just handed over a large portion of their savings for a down payment, not to mention closing costs and moving expenses. On top of that, they are paying out more each month in the form of extra insurance, repair and maintenance, and even increased utilities.
New homeowners typically want to deck out their new place with nice furniture and renovations and make it theirs. It’s hard to fight it, but going all out on new furnishings and decor right off the bat for many it a dangerous situation. As important as it is to make your new home really nice, it’s more important to be able to stay in it. You’ve made the decision to buy a home, you’ll likely be there for a long time, give your savings time to grow again and get used to the increased expenses new homeownership brings first. The new carpet, cabinets, and home theater system will still be there when you can better afford it.
Trying To Save Money By Doing Everything Themselves
Trying to save money by doing repairs or improvements you aren’t qualified to undertake can be a costly mistake. While certain things like painting or repairing holes in walls can be done by just about anyone, dangerous repairs or projects such as electrical and roofing should be left to professionals.
Your home isn’t just where you live, it’s also an investment and should be treated as such. Avoid trying to go cheap on it and not only will you protect your investment but even save yourself from injury or even death!
Not Paying Attention To Energy Efficiency
Energy efficiency is a real expense for homeowners and it’s often overlooked by many, new or not. Oftentimes new homes are bought with inefficient light bulbs or with inadequate insulation and older windows and doors that aren’t sealed properly. This can cost hundreds even thousands of dollars over time in wasted energy.
If your serious about saving money you can curb energy costs by performing an energy audit on your home. There are many resources on the internet to help you do this such as the Department Of Energy.
Not Getting Rid Of Private Mortgage Insurance ASAP
As many first-time homeowners cannot afford a 20% down payment, they are often saddled with Private Mortgage Insurance which protects lenders should the borrower default on a mortgage.
This often adds $100 or more to monthly mortgage payments with no return on the cost. It’s wasted money and should be eliminated as soon as possible. The best way to do this is to make a few extra mortgage payments within the first few years of the mortgage. Once you get rid of the PMI early on, you’ll not only save that $100 a month but also greatly reduce the lifetime interest on the mortgage itself!
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