So, you just bought a new house, and you can officially call yourself a “homeowner”. Go ahead and do your happy dance, pop open the bottle of champagne, and update your social media followers. Once you have calmed down, take a look at these 10 tips on what all new home owners should do immediately after buying a house.
10. Focus on the Essentials
When you first buy a house, you may be tempted to get a new flat screen TV or immediately begin construction of your man cave or she-shed. However, remember that you and your family will need to purchase a lot of essentials first before you can go ahead with all of the bells and whistles. You may need to buy new appliances, beds, cleaning supplies, and other things you simply cannot live without. Take at least a week or two to settle in, and try to get in a routine. Once you live in a space, you begin to realize what you need to make your day run smoothly. Only buy items that you consider essentials before you move forward on the bigger projects.
9. Check Your Credit Score
Leading up to buying a home, you were probably monitoring your credit score closely, because you were trying to qualify for a mortgage. Just because you have a house now doesn’t mean you give up checking. It is still important to maintain a good score, because some day, you may need to take out another credit card or a personal loan. If you have not already done so, get an account with Credit Sesame, and check your score for free. You can also get e-mail and text alerts letting you know whenever there is a change in your score.
8. Call Your Insurance Company
After you become a home owner, you can save money on your car insurance. Call to speak with a customer service representative, and they should be able to help you qualify for a lower rate. On top of getting insurance, you need home owner’s insurance, of course! This is very important, because you never know if there will be a natural disaster, or if something happens to your home that is completely out of your control. Sometimes, you can bundle your home owner’s insurance together with your current carrier. A customer service agent should be able to answer all of your questions.
7. Make a New Budget
When you buy a house, you have to put down an incredible amount of money. There is the down payment, closing cost, and all of the miscellaneous expenses that will pop up along the way. Once you are a home owner, it becomes more important than ever to create a new budget. Obviously, mortgage payments, insurance, taxes, and utilities are going to add up. Write down your total house hold income, and subtract the new expenses. Then, evaluate how much you have left each month, and what the priorities are.
6. After Buying a House, Write a To-Do List Of Repairs
Before you jump into making repairs, go around your house and make a list of what needs to get done. If you are not sure, hire an inspector to help you identify some of the issues. Once you have identified the full list, figure out what needs your immediate attention, and write out a budget of what everything will cost.
After you have your to-do-list complete, hire qualified contractors to get the jobs done. You do not want to find a random handyman on Craigslist, because they may not necessarily be the best person for the job. You always want to find well-qualified professionals who have years of experience. If the job is done with a lot of mistakes, you just may have to hire someone else to come back and fix it later.
5. Don’t Over-Spend on Personalization
A lot of first-time home buyers are influenced by shows they see on HGTV, and they believe that they should immediately do a huge makeover as soon as they buy their property. However, what you see on TV is almost never like reality. You don’t see all of the help these couples are getting behind the scenes from producers who are making sure they stay on-budget and on-schedule.
Also, never assume that every renovation will actually add value to your home. For example, did you know that a kitchen renovation has one of the lowest return-on-investments in your property value? And yet it is one of the first dreams that most people would love to fulfill on their checklist.
4. Learn About Improvements vs. Repairs
There is a difference between an “improvement” and a repair, and is important to know for estimating the new value of your home. There are certain remodels that will get significantly more return-on-investment. For example, you may have gotten your house at a huge discount because it had an old roof with holes in it. According to Home Advisor, a new roof increases the home value by $12,000. If you only spent $8,000 to get the roof installed, you get that $4,000 profit in equity.
A “repair” will cost money, but it will not change the value of your home at all. It just comes with the territory of being a home owner. Some examples of repairs are hiring a plumber to fix a leaky faucet or painting your walls.
3. Make Sure Your Home is Energy Efficient
Once you own your home, figure out if it is energy efficient or not. You do not necessarily have to get solar panels on your roof to help reduce the cost of your energy consumption. Your attic and walls should both be insulated to help maintain the temperature of the home. Without insulation, a building becomes nearly just as hot or cold as the weather outside. Even if your home already has insulation, it may still be need to be replaced once every 15 years if it is no longer doing a good job.
Also consider changing out your light bulbs, or opting for LED light whenever possible. Turn lights off when you leave a room, and unplug items when they are no longer in use. You can buy a power strip with an “on/off” switch to help you turn off all of your devices when they are not being used. You can also evaluate your appliances like the refrigerator and clothes dryer to see how much they cost to run pet year. Upgrade if it makes financial sense.
2. Always Keep Your Receipts
Whether you are doing an improvement or repair, always keep all of your receipts. This will be crucial for when you get ready to buy your house at some point in the future. The IRS needs to know all of the expenses involved in order to tax you properly. They calculate how much you originally paid for the house, plus the cost of improvements. That number is subtracted by the sale price to get your profit.
For example, if you purchased a home for $150,000 and spent $50,000 on improvements, you spent a total of $200,000. Then, you were able to sell it for $300,000. This means you earned $100,000 in profit, and the IRS will expect you to pay taxes on that amount.
1. Get Help With Your Taxes
Paying property taxes is just one more thing for you to worry about once a year. It will no longer be possible for you to file a simple “EZ” form with your W-2. While it is possible to figure it out on your own, you should be careful to save your receipts and fill out your taxes carefully. For the first time in your life, it may be completely necessary to hire an accountant to help you.
If you are not sure what counts as a “repair” or what is an “improvement”, you will need to discuss these discrepancies with an accountant who is qualified in these matters. There may have been some renovations that exist in a bit of a grey area, and they will need to make a decision on how to include it in your taxes.