LESSON 10: Life After Closing

BE A SMART HOMEOWNER

The home buying process is over! Now the home owning adventure begins.

As new homeowners discover,there are a lot of details. It requires a little more planning and attention.

START AHEAD OF THE GAME AND STAY THERE

• Protect your investment with regular maintenance/repair
• Update your insurance coverage as needed
• Keep your financial records in order
• Establish a system for keeping track of payments
• Stay alert to future savings opportunities (such as refinancing)

DO YOU KNOW WHERE YOUR RECORDS ARE?

There is A LOT of paperwork involved in homeowning. Set up a system that helps you tame the growing mound of records and papers.(An accordion folder works for some.)

• Open a safety deposit box for valuable home-related papers that you don't need at hand.
• Keep a separate file of all papers and records you will need for taxes
• Set up reminders on your computer (or day planner) to flag payment dates or maintenance schedule items
• Maintain a complete file of repairs, remodeling and maintenance that includes costs and notes.
• Keep a file of repair people and services you want to use again.

KEEP A GRIP ON THE FINANCES

New homeowners offer these tips for handling the new financial responsibilities and challenges.

• Consider paying your mortgage electronically (EFT).
  * You will never have to worry about late payments.
  * Ask your lender if you can get a receipt for your records.
• Anticipate and plan for Escrow account shortages.
  * Lenders like to keep a cushion of money to pay your bills
  * If shortages occur, you can suddenly be asked to add a large amount to cover the shortages.
• BUDGET for increases in taxes, insurance, utilities.
  * You won't be caught off guard when gas prices soar.
• Consider MAJOR PURCHASES or expenditures carefully
  * How will a new car or a big vacation affect your budget?
• Open a SAVINGS ACCOUNT to cover future projects.
  * Consistent savings can add up quickly
  * Contribute loose change to the new kitchen fund every week

SET UP YOUR MAINTENANCE PLAN

You accompanied your home inspector during your home inspection. You learned a few things about the care and repair your home is going to require. There are certain things that should be checked, changed and replaced regularly (like scheduled car maintenance). You can use the list below as a guide to create your own maintenance schedule/calendar. Organize the tasks by time: spring, fall, twice a year, and so on.

INSIDE THE HOME

• Check tile, laminates and grouting
• Condition of floors; refinishing needed
• Condition of walls, wall finishes

HOUSE SYSTEMS

• Check flush valves, faucets, hose bibs, and supply and drainage piping, including those in basement/crawl space
• Check septic tank and water heater
• Check and replace damaged cords and plugs
• Check exposed and overhead wiring for damage/missing insulation
• Clean/change air filters
• Clean area around furnaces
• Call in HVAC professional to check heating/cooling
• Take out window air conditioners for winter
• Check and clean humidifier/dehumidifier

HOUSE EXTERIOR

• Clean out window wells and storm drains
• Examine trim on doors and windows
• Examine screens, windows and weather stripping
• Clean off roofs; clean and check gutters, downspouts
• Check condition of roof tiles or shingles, chimneys
• Look for dampness on roof undersides
• Check for birds nests around vents, louvers, chimneys
• Make sure window hardware is in working condition
• Door and window caulking in good condition
• Condition of painted areas, siding and trim
• Examine masonry for cracks, loose joints

YARD/PROPERTY

• Check for cracks in driveways and sidewalks
• Drain water lines and hoses
• Condition of trees (broken branches, dead areas)
• Check for drainage problems on property
• Condition of fences, walls

BASEMENT/FOUNDATION

• Check for leaks, drainage problems
• Check for dampness, flooding after rain
• Check for signs of termites

LOOK FOR FUTURE COST SAVINGS

There will be opportunities to reduce payments and fees. Here are a few areas to keep an eye on.

• Have home values dropped in your area? If so, you might consider filing an assessment appeal to lower taxes.
• Does refinancing make sense?
  Do the math every so often (factor in closing costs to see if a refinance will pay off) Check in with lenders to see what they are offering.
• Consider paying your own property tax and eliminating that portion of your Escrow account.
  Lenders generally will allow this if you have a solid payment history over a year or more. (Of course, it is then YOUR responsibility to make the twice-yearly tax payment to the County. But, you keep the money until then.)
• Do you have enough equity to cancel PMI?
  Ask your lender what it will take to drop the monthly Personal Mortgage Insurance. Then keep track of your equity so you can contact them when you think you're eligible. (Your lender will probably not let you know if you don't ask).
• Major, permanent improvements can offset capital gains when you sell. Make sure you keep a file of remodeling receipts.

This completes our 10-lesson quick course in homebuying. Print and save all 10 for your future reference; share them with friends and family who are about to buy a home.

We are confident the tips and information in this quick course can help you take charge of the home buying process and avoid some costly mistakes and headaches along the way.