I did it. I am all that. I am under contract and ready to own my first property. I will finally have something to show for all of the years of school and work. So…why am I so scared?
Sorry to burst your bubble, but you should be too if you are planning to own a home. Being able to save for a down payment and get a bank loan are huge accomplishments, but here are five things I learned from home ownership that you should take into consideration before closing on a property.
1. Mortgage commitment is stronger than matrimony (sorry romantics). Let’s say your engagement doesn’t lead to a wedding. You cry a little, break every picture with him or her and eventually move on.
If you do wed and (God forbid) your marriage ends up in divorce, you split the furniture and share custody of the kids. Painful, yet still manageable.
But if you have a mortgage and happen to loose your job, your life is basically over. Your credit will be ruined, you will be harassed by bank callers at every hour of the day and if you don’t come up with a payment, you will eventually lose the property, regardless of how much you invested on it. That is why it is good plan for the worse and get a good 401K plan. It will get you out of trouble when you need to borrow emergency money.
2. Once you own a crib, uncle Sam wants a piece of it. Property taxes are sometimes harder on your finances than the actual mortgage payment. Before you commit to buy, make sure you find out how much you will have to pay on property taxes and make sure you apply to a Homestead extension. This will guarantee that no matter how the real state bubble grows or shrinks, your taxes will not be inflated from year to year.
3. Burn baby burn. Your money will basically disintegrate once you move into your own place. Whether you are a garden lover, a garage lover, a foodie, etc., you will not be able to escape the need to invest on a project or two to make your new place more “yours.” I learned I should always save additional money or ask for a little extra cash on the mortgage loan to invest on renovations.
4. Wild things. This lesson was learned the hard way. I knew I had termites when I moved into my house but decided to wait until it got ugly to take care of them. Big mistake. The damage was so bad I had to tent my home, which should be a last resort since it is awful for the environment. Research for a pest control company that offers you monthly maintenance to keep your creepy roommates in check.
5. Insure it with care. Property insurance is mandatory, but I urge you to refrain from choosing the cheapest plan to save money. Read your policy options carefully and have someone who can translate legal jargon explain all of your options. The last thing you want to hear when a hurricane goes by your house and breaks your roof into two is that “the policy you chose did not cover natural disasters.”
