“Essential Steps to Financial Stability Post Home Purchase”

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Revisit Your Budget

Buying a home is a significant investment that can disrupt your personal finances. Your old budget is now replaced by one that includes a mortgage. You may have even used your savings for a down payment. Once your home purchase is complete, it’s time to revisit your budget, rebuild your savings, and track your expenses. Here’s how to manage these critical steps.

Revisit Your Budget

Becoming a homeowner changes your monthly expenses, requiring you to re-balance your budget. Here are some expenses you’ll encounter:

• Mortgage payment: Your monthly mortgage payment may include principal, interest, property taxes, and homeowners insurance.
• Property taxes: These taxes help fund local services and infrastructure. If not included in your mortgage payment, check with your local tax assessor for payment details.
• Homeowners insurance: Required by lenders to protect the property’s value. It may be included in your mortgage payment or paid directly to your insurance provider.
• Homeowner association (HOA) fees: If applicable, these fees cover the maintenance of common amenities.
• Maintenance and repairs: As a homeowner, you’re responsible for maintenance and repair costs, from routine gardening to major repairs like roof replacement.
• Utilities: Utility costs may increase when you own a home. Look for ways to reduce energy bills to keep costs down.

Rebuild Your Savings

After using your savings for a down payment and moving expenses, it’s time to reset your savings goals. Consider both short- and long-term savings, including retirement, education, emergencies, and major planned expenses.

Shore Up Your Emergency Fund

Experts recommend keeping three to six months’ worth of expenses in an emergency savings account. If you used emergency savings for your down payment, repay yourself over time. Even if you haven’t touched your emergency savings, consider adding to it, as your monthly expenses and potential for unexpected costs may be higher now.

Create a Sinking Fund for Home Expenses

A sinking fund is dedicated savings for large expenses. For example, if you want to install new landscaping costing $5,000, setting aside $200 monthly will help you save the amount in about two years without touching your emergency savings or using credit. You can create multiple sinking funds for different expenses or a general fund for home repairs and improvements.

Track Your Expenses

Owning a home can mean more and larger expenses, making financial management more challenging. Efficiently and consistently tracking your expenses is key:

• Use an app to track expenses on your mobile device. Budgeting or expense-tracking apps can connect to your bank, credit card, investment, and retirement accounts to track expenses and savings automatically.
• Create a spreadsheet to track your income and expenses monthly, using information from your bank, credit card, and investment account statements.
• Log your spending in a notebook or paper ledger. You can stash receipts in an envelope and log them later or use your monthly statements to record expenses.

The Bottom Line

Regaining your financial equilibrium after buying a home requires thought and effort, but it’s an essential part of settling into your new home and life. For any mortgage service needs, call O1ne Mortgage at 213-732-3074. We’re here to help you manage your finances and achieve your homeownership goals.

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