by guest blogger, Joelle Spear, CFP® of Canby Financial Advisors, LLC
Congratulations. You are now part of the American Dream. You made it. After a long process from open houses to the closing table, you have the keys to your first home. If your process of buying a home was anything like my first purchase, you had some anxious moments along the way. Now you can relax on lazy Sundays and host BBQs or dinner parties.
As a financial advisor I want to share some valuable post-closing advice.
Your mortgage broker/lender made sure you didn’t make any large purchases prior to closing. Now you must be excited to go shopping for furniture and decorations, but remember not to overspend. It’s important to have three to six months income in cash for emergencies. Also, as a general rule of thumb, you should expect to spend around 1% of the market value of your home every year on maintenance. For example, if you paid $500,000 for your home, maintenance may cost around $5,000 per year. If you plan to outsource yard work and interior cleaning, estimate another 1% of your home’s value for these expenses. Don’t lose sight of your big financial picture. Even though you have new expenses, continue to save for retirement.
Your house is an asset. The bank made sure you have homeowner’s insurance to replace your home as a condition to obtaining your mortgage. You may be eligible for a discount for insuring your cars and home through the same insurer. Take the time to talk to your property and casualty agent about reviewing your property insurance picture. And ask about an umbrella policy for liabilities your homeowner’s and auto insurance might not cover.
If you bought your house with a spouse/partner, or have dependents, please take the time to obtain life insurance. If you already have insurance, review your coverage. Hopefully we all lead long, healthy lives but life can change in a matter of seconds with unexpected emergencies. How will you pay the mortgage if one of you passes away? There are various insurance options to consider, depending on your situation. Covering a portion or the entire mortgage through life insurance is a good place to start.
Have fun with your new home. Create memories. Please don’t put off until tomorrow what you can do today. Two items that are important enough to do today are calling your property casualty agent and obtaining or reviewing your life insurance. I am available to discuss your overall financial planning matter and your particular life insurance situation. Please feel free to call me at 617-721-7177.
Written by Joelle Spear, CFP®. Joelle is a Financial Advisor at Canby Financial Advisors, LLC in Worcester, MA. Securities offered through Commonwealth Financial Network®, Member FINRA/SIPC, a Registered Investment Adviser. Fixed Insurance products and services offered through CES or Canby Financial Advisors. Advisory services offered by Canby Financial Advisors are separate and unrelated to Commonwealth.