Purchasing your first home may seem like the financial finish line for most folks. It could very well be the most important purchase of your life, but that doesn’t mean your financial responsibilities are over.

There are many ways to maximize your financial effectiveness during the early stages as a homeowner. Follow these 5 tips to ensure your finances work for you, not against you.

 

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1. Reassess Your Mortgage

Don't consider the initial mortgage you agree to as a permanent agreement that can't be revisited. Many new homeowners are advised to settle for 30-year mortgages, but in many cases 15 year refinance rates are cheaper than 30 year rates. 

The main advantage of a 15-year mortgage is that lenders charge lower interest rates, and you’ll be able to pay it off in half the time. If your income has increased since you first bought your home, you have even more reason to go down the 15-year fixed mortgage route.

2. Revisit Your Budget

A well-rounded budget is a top priority for any responsible homeowner, new or experienced. While your budget may have included saving in such a way that would allow you to purchase the home that you've now gotten, you now have household-related items to consider.

If you bought your home as a fixer-upper, you’re already planning on how to stretch your budget to make the necessary adjustments. If this wasn’t at the forefront of your mind, living in your house for a year will reveal some renovations to consider. 

Once you move in, consider continuing to save for the next significant expense, which may come as an exciting renovation or an unexpected but necessary repair. 

3. Family Planning

A great joy for many in life is filling a home with a growing family. Many couples wait until their most significant financial hurdle, buying a home, has been crossed. And considering that it costs $12,980 per year to raise a child, it makes sense why you should see this as part of your financial planning. 

Consider the long-term financial implications before you jump into becoming parents or adding a child to your existing family. While you may have the home part covered, it's time to look at life insurance and a child's everyday expenses. 

4. Check in on Retirement Plan

Mortgages aren’t the only financial plans that can change. While you’re thinking long-term, it’s good to check on your retirement preparations. The average American expects to retire in their 60s. If you’re saving by the time you’re 35, you’ll need to put 15 to 20 percent of your income away to achieve this. 

Check your contributions to your employer’s plan for your 401(k), or if you don’t have access to one, consider a traditional or Roth IRA. Review your budget to see if your contribution rate is sustainable. 

5. Update Insurance

As a first-time homebuyer, you have homeowner’s insurance, but what other plans best complement this? Life insurance is a good choice, though the variety of plans accompanying it can be confusing. Consider whether permanent or term life will serve you best.

Beyond that, several insurance bundles exist, depending on which company you use. Speak to your insurance agent to determine which bundles will net you the most savings while protecting your belongings and future. 

Securing Your Financial Future

The largest financial mountain to climb has been reached. You’ve used your financial skills to secure one of the most important purchases of your life. Now is the time to invest in the rest of your future. Follow these 5 tips to keep your budgeting habits in check and ensure a worthwhile life of financial responsibility.