There’s something about fall that gives me “all the feels,” as some would say. Maybe it’s the way the wind blows the leaves like a scene from a movie, or just how breathtaking the oranges and yellows of the trees pop against the grey November skies. Fall reminds me just how much owning a home means to me and the memories that I have created there.
As I’m nearing my fourth year of owning a home (my first!), and outside of the home financing process itself I’ve picked up a few lessons along the way that may help other first time homebuyers navigate the home buying landscape.
Property taxes can increase your monthly payment
We receive our monthly mortgage statements online, so when I received a letter from our mortgage lender informing us that our monthly mortgage payment would be going up due to an increase in property taxes. This occurred because our principal and interest are rolled into an escrow with our property taxes and insurance, and what we pay each month is an estimate of these bills. At the end of the year, the lender adjusts your monthly escrow amount based on the actual tax and insurance bills. Since our property tax portion of our escrow increased, we were able to spread the payments out over the next year. Conversely, if your property tax decreases, the lender will refund the money you overpaid.
Mortgage insurance/premiums are a real thing
After crunching numbers and assessing our home financing options, we decided that a conventional loan was the best fit for us. We almost played a game of “heads or tails” when it came down to our final decision. Without having 20% to put down on our home, we knew that we’d be paying for Private Mortgage Insurance (or Mortgage Insurance Premiums for FHA loans), which is rarely factored into the monthly mortgage estimate you see listed on sites like Zillow. What’s the purpose of the PMI? How do you factor in the PMI? Discover the basics on mortgage insurance premiums and private mortgage insurance.
The importance of a rainy day fund
Prior to moving into my home, I lived in an apartment where any repair was handled immediately after a quick call to the leasing office. No questions asked, no service fees, and no skills needed (other than dialing the right number). Since we purchased our home, we’ve replaced concrete sidewalk slabs, sinks, toilets, electrical outlets… and the list goes on. I know my aging roof and furnace won’t last forever, so I’ve made it a priority to tuck money aside for these large, looming home repairs. We all know that money doesn’t grow on trees, but If you currently own a home the equity is most likely growing and a cash-out refinance can help jumpstart your rainy day fund.
There’s not a corner in my house that is Pinterest-worthy, but we’ve made it our own and that’s all that matters. If home ownership is part of your American dream, do your research; know your budget and understand all of the “extras” that can come with buying a home.