A majority of Kenyans dream to buy or build a new home. In fact, some of them have started saving up for it. But are they all prepared to handle other expenses?
Unfortunately, most of us assume buying a house eliminates all your burdens, that since you are not paying rent you have no more worries. Sorry to burst your bubble but being a homeowner comes with its shares of burdens as well.
Purchasing a new home is more than the cost of the property itself. If you think that paying the downpayment is the greatest financial feat you have to face, then you are mistaken. Soon, you will feel that money is tight on your first year as a homeowner.
Here are smart money tips to help you transition into a homeowner without breaking the bank
Create a realistic spending plan
Now that you are a homeowner, you need to know the new expenses that you need to constantly shoulder:
1.Property Taxes
You might think that since you have been paying rent, handling the monthly mortgage due will be easy as pie. This could be true if you are only factoring the principle and interest rate into the mortgage calculator.
On the other hand, you are not considering the property taxes you have to settle each year.
Get to know how much tax you have to pay and then divide it into 12 months. This way, you can add it to your monthly spending plan.
2. Homeowners Association
Buying a house in a planned neighbourhood you will automatically be a part of the homeowners association. Though many homeowners association fees are collected annually, it is better to set aside some cash every month to avoid getting shocked.
These are service charges such as for security, estate maintenance or even garbage collection.
3. Insurance
Since a house is the biggest purchase you will ever make, it is only vital to keeping it insured. You’ll need to pay for a monthly policy to cover your home in worst-case scenarios. You may think that it’s an additional financial burden but you will be thankful to have it when you need it the most.
Related: Home Insurance: Why you need it
Always pay your mortgage on time
If you want to save as much cash as possible, you will need to pay your mortgage on time. Some lenders will foreclose your house if you don’t pay for a couple of months. This means you will lose the money you have saved for so long.
And it can get worse:
Your credit score will ultimately suffer if you keep on missing your due dates. This means you will lose the privileged of getting new loans from a lender, car loans, and another mortgage.
Hire the right expert
There will be times when do-it-yourself repairs will not address the issue. You’ll need a qualified professional to do the job because:
• A professional can tell you the accurate issue and quote you the right price of repairs;
• Doing a project incorrectly can end up costing you more;
• Professionals will guarantee their work and the parts for a couple of months up to a year
Consult with your agent
Your relationship with your agent shouldn’t end after closing. It should continue on especially when you are still new to the homeownership. There are things to consult on such as service charges.
Homeownership is both a rewarding and overwhelming experience. Be sure to prepare yourself for additional costs that lie ahead and take the smart steps to steer away from unnecessary costs.
