Homeownership is a life goal for many, and yet also comes with challenges and complexities that lots of first-time buyers do not know about until they are a long way into the process of purchasing a property. If you are eager to become a homeowner, but you want to go in with as much information and advice as you can, here is a handful of truth about homeownership that will put you in the best possible position.
Home Insurance Is Essential
Whether you are buying a home with the help of a mortgage or snapping it up outright with cash, you will need to ensure it. Indeed lenders will require their customers to get insurance in order to authorize the loan, so picking the right homeowners insurance is important.
There are a number of factors to consider, such as the type of cover that a policy includes. For example, some policies will protect against accidental damage to your possessions, while others will not. Non-standard inclusions such as flood damage are also worth looking out for, especially if your home is in an area where specific types of extreme weather and other natural disasters are more likely.
You might also consider getting income protection insurance, which will help you to cover the costs of your home mortgage repayments if you are unable to work for a period of time, or if your income disrupts in other ways. Likewise having life insurance is sensible, especially if you are buying your home with a partner and you have dependents in tow, as this will also minimize the financial burden of homeownership if tragedy strikes.
In short, your home is your most valuable asset and so you should use insurance to protect it, as well as to protect you against the surprise expenses that will invariably arise at some point.
Budgeting for Maintenance Is Necessary
The cost of keeping your home in a state of good repair is part and parcel of buying a property, as there will be no landlord to call when something needs fixing.
Experts argue over the exact figures you should be expecting to spend on maintenance, but setting aside around one percent of your home’s value to carry out essential repairs as well as cosmetic work over the course of a year is not an unreasonable idea.
This is not just about making sure that the property remains liveable while you are the owner, but also about keeping it in a good condition so that when you do come to sell, you can command a higher price tag from prospective buyers. Likewise doing small jobs regularly is better than putting them off and having to face up to larger costs when minor issues are exacerbated over time.
Personalization Is a Double-Edged Sword
Speaking of the future salability of your home, another aspect which a lot of owners fail to think about is how any home improvements they make will be perceived by others.
That is not to say that you should avoid making any adaptations altogether, but rather that you should be prepared for the chance that any seriously left-of-field alterations you make might have a detrimental impact on the value, or at least not add any value in the long run, compared with more desirable additions.
This is one of the reasons that some of the mega-mansions built by celebrities end up sitting on the market for years unsold; going too far down the customization route will put off all but a tiny minority of potential buyers.
Of course, it is entirely OK to ignore this advice and follow your heart; you just need to be aware of and comfortable with the consequences.
Property Is Not Always a Stable Investment
Anyone who wants to climb the property ladder quickly or find a way to make their money work harder for them at a time when interest rates on savings accounts remain low might think that buying a home is not just a good investment, but a comparatively risk-free one.
In reality, while the property is definitely more secure than other forms of investment, it all depends on the time scales you are talking about and the kinds of outside pressures that might be applied to the housing market during your tenure in a particular home.
If a recession occurs, house prices will usually fall, and it can take years for them to recover. Neighborhoods, towns, cities, and entire geographic regions can rise and fall in popularity with buyers, which also makes a difference to the stability of your investment.
Ultimately you need to familiarize yourself with all of these elements of homeownership and take your personal circumstances onboard before you pull the trigger, as going in with your eyes open will leave you less exposed if something goes awry.