Homeownership is a big step and sometimes the adjustment from renter to homeowner can be big as well. The following are some tips to make the transition easier.
• Be realistic. Don't fall in love with a home you can't afford. You may convince yourself that if you scrimp and tighten your belt, you can afford it. But you are putting yourself at risk. Buy the home you can afford and if you're able, you can "trade up" when you can afford more house.
• Give yourself a little wiggle room. If you are a first-time homebuyer, don't buy at the very top of the price range you qualify for. Homeownership expenses don't stop with the mortgage – don't max-out your budget on the price of the home. Give yourself some extra money in your monthly budget for costs you didn't anticipate.
• Don't plan other big purchases in the first 24 months of owning your home. Give yourself time to get used to the costs and responsibilities of homeownership before taking on more debt. That means no new car or other big ticket item unless absolutely necessary. However if you need to purchase appliances for your new home, be sure to factor those costs into your budget.
• Build an "emergency fund" into your budget. Put a little away each month for the unexpected. That way when the car needs a new transmission or the house needs a new roof you won't be tempted to reallocate funds from existing financial responsibilities.
• Have a Plan B. If something happens that may impact your ability to make your mortgage payments, like losing your job or a health crisis, develop a plan immediately. Don't wait until you're in a financial predicament before assessing your options, including calling your mortgage lender right away to discuss alternatives.
• Recognize the warning signs. Often, homeowners in financial trouble do not want to admit it. But if you recognize that you are struggling and do something about it early on, you are in a far better situation than if facing a foreclosure. Not being honest with yourself will only make things worse in the long run.
• Answer the phone and read your mail. Often, when things begin to get out of control financially, people avoid their creditors. Don't. Talk to them. Many creditors and your mortgage lender will work with you. Also consider meeting with a reputable credit counselor to help you develop a plan to prevent foreclosure on your home.
