6 Money Moves to Make After Buying Your First House

By Christa Avampato on 28 September 2017 0 comments

You bought your first home. This is an exciting conclusion to what was likely a long and winding road. As you are unpacking your boxes, settling in, and decorating your new digs, there are some smart money moves you should make immediately to keep the good times rolling.

1. Adjust your last will and testament

Now that you have a new home, you need to update your will. In this time of excitement, updating a will might feel like putting a damper on the fun, but it's critically important. You need to be responsible for protecting the future of your loved ones and your home. (See also: Don't Make These 5 Common Mistakes When Writing a Will)

2. Get rid of PMI as fast as you can

Private mortgage insurance (PMI) is a necessary fee for most people who buy a home with less than a 20 percent down payment. This can be a significant expense, sometimes costing thousands of dollars each year. Do whatever you can to get to that 20 percent equity mark so that you can drop the PMI payments.

3. Make a plan to pay a little extra every month

At the beginning of a mortgage, you are mostly paying interest and very little principal with every monthly payment. That ratio of interest to principal will decrease eventually, but it will take a few years.

To more quickly pay down your mortgage, set aside a little extra every month for your mortgage payment. Why? Anything you pay above your monthly payment goes directly against the principal. (Just be sure those extra payments are going to principal; check with your mortgage lender.) The faster you reduce your principal, the faster you will pay off your home. A lower principal will also make it easier to refinance the mortgage down the line if you choose to do that in the future. (See also: What's Faster for Mortgage Payoff: $100/Month Extra or 1 Payment/Year Extra?)

4. Replenish your emergency funds

Many people use a substantial part of their cash savings, if not all of it, when they buy their first home. It’s crucial that you begin to rebuild this emergency fund as soon as you can.

An emergency fund is necessary if you lose your job for any reason, have unexpected bills, or if you need to do emergency repairs on your home. Experts in the consumer finance field have varying opinions when it comes to how much to set aside in an emergency fund, but many suggest having three to six month's worth of expenses saved. Some more conservative advisers even suggest saving up enough to cover one year of expenses. Consider your lifestyle and personal risk profile to find the best target amount for you.

5. Reconsider your life insurance policy

Now that you have this beautiful new home, you will need to make sure the mortgage can be covered by your life insurance. You don’t want your heirs to struggle to figure out what to do in the event that an unforeseen circumstance occurs.

How much insurance do you need? Generally, the guideline for life insurance is 10 times your annual income plus any large debts like a home mortgage. Talk to your insurance company and/or financial adviser to get their perspective, and make any necessary adjustments. (See also: 5 Reasons Why Life Insurance Isn't Just for Old People)

6. Change your locks and install deadbolts

Safety is a huge part of homeownership, and it has financial implications. As soon as you have the keys in your hand, contact a locksmith to get all of the locks on your doors and windows changed, and install deadbolts on doors where you currently don’t have them. The previous owners likely gave copies of their keys to neighbors, friends, family members, the dog walker, or people who did work on the home. You don’t want those people to have access to what is now your house. You may also want to consider a home security system.

All of these safety measures may provide a financial deduction on your homeowners insurance. Contact your insurance company to find out if you qualify for a reduction in your rate. (See also: 7 Times to Update Your Homeowners Insurance)

There is a desire to rest on our laurels after completing the purchase of a home. You should definitely bask in the glow of new homeownership, but this is also a time to remain financially vigilant. Remember that when it comes to your personal finances, remaining responsible and forward-thinking is the key to lasting success.

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6 Money Moves to Make After Buying Your First House

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