Owning a home is the American dream. According to Keeping Current Matters, “homeownership ranks above other significant milestones, including retirement, having a successful career, and earning a college degree”. Once achieved. It’s a major accomplishment and considered important in being part of a community, achieving success in life, and providing for one’s family. After the joy and celebrations have settled, the reality of annual property taxes and the costs of repairs are sobering. Still, there are other aspects that are often overlooked. To help, we’ll offer 5 things every homeowner should know.
1. Maintenance Matters
We all experience clogged drains and faulty appliances. They may start as just a nuisance but eventually get to the point they cannot be ignored. For what is often your most important purchase, it’s important homeowners (1) address problems early and (2) use licensed contractors.
By addressing issues before they become bigger problems, you save time and the stress of having one other thing being added to your home checklist. If you notice something like a issue, it’s best to tackle the problem by finding out what’s causing it right away. For example, if your screen door is giving trouble to close, it may just be debris building up. In this case, a good cleaning of the track may be all you need to do. However, ignoring the problem may result in a rushing teenager breaking the handle off the door, which is more costly to repair. The worse thing you can do as a homeowner is putting things out of your mind. More than likely, it will come back to haunt you.
The other thing to consider is using licensed contractors for more complicated issues. You may want to save money by doing it yourself. In some cases, however, this may not be the best way forward. Mistakes you make may cost more in the long run. Easier projects like painting are not a bad idea but rewiring a line is a lot trickier and requires technical expertise and licensing. It’s best to play it safe with your valuable home.
2. Tax Deductions are Helpful
Homeowners should be aware that there are certain expenses that may or may not be eligible to be included in your taxes. Hiring a certified accountant is important to ensure you don’t miss anything. According to this IRS article entitled Know what’s deductible after buying that first home, sweet home, “First-time homeowners should make themselves familiar with authorized deductions, programs that can assist with home ownership and the use of housing allowances that can be beneficial”. Be sure to read this article and educate yourself in time for tax season.
3. Insurance is Important
Most of us with a mortgage are required by your lender to have homeowners insurance. This type of insurance covers large scale damage to homes such as fires and storm damage. It’s also recommended that you have this type of insurance even if you are not required to have it. It protects you from paying the complete cost or rebuilding your home and also helps you handle personal loss during a devasting time. It’s so important you know what your policy covers and does NOT cover.
Note that there are also home warranties. While they function a lot like insurance, home warranties are not insurance polices. Regardless, these plans cover the cost of your home’s major appliances that may go bad due to normal wear and tear. If you’re interested in learning more about the difference between home insurance and home warranty, refer to American Home Shield for more information.
Another type of insurance to consider is life insurance. While not required, this is often a consideration if you own your home with someone else. Life insurance offers much needed money if one person passes and the other does not have the resources to keep making mortgage payments. It protects your loved one from possibly defaulting on the loan and losing the home.
4. Property Taxes Change
As a homeowner, one of the biggest associated costs will be your annual property tax sent from the county/city in which you live. While you might remember the amount from the time you settled on your home, every homeowner should know that this amount may fluctuate over time. This amount is determined by how much your house has been assessed for by the authorities. Similarly, reasons the amount you owe may change could be due to a new assessment, state and local budget changes, and home improvements to your home (like an addition). According to Architectural Digest, you can always ask for a new assessment if you think the information is not correct. This is yet another important thing every homeowner should know.
5.Your Home’s Value is Significant
If you’re one of the lucky ones, you may have received a market update from your community real estate agent. These reports are a great way of getting an idea on what is happening in the real estate market. Even you’re even luckier, a real estate professional, like us, will provide a “home valuation” upon request. It provides a general idea about how much your home is worth. This information is valuable for every homeowner, not just if you’re selling your home.
One reason you may want to keep track of the value of your home is if you are thinking of a “cash out refinance”, also called a refinance. This is when you take out a new home loan with a lender using the equity in your home. Each lender has their own requirements but, in general, lenders require you have at least 20% equity and you borrow no more than 80% of that amount. Usually there are no rules on how you use this cash but most homeowners tend to use this to increase the value of their home. Find out more about refinancing from this great article by Guaranteed Rate.
Another great reason to know your home’s value is in the event something unexpected happens and you need to sell your home quickly. It provides a general idea of what you can expect to sell your home for based on similar recent sold homes in your area, the condition your home is in (why maintenance is so important), real estate market conditions, and upgrades/amenities your home may have. These are just some of the factors used in preparing your home’s Comparative Market Analysis.
Homeownerships comes with many perks and more responsibilities. Keeping track of your home’s maintenance, tax benefits, insurance policies, property taxes, and value are great ways of being a responsible homeowner and having your investment work for you in the long run.
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