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After you find your new home, get approved for a mortgage, and make it through closing, it’s smooth sailing, right? Not quite. Homeownership ushers in additional responsibilities and obligations you need to be prepared for.
After you close on your home, avoid making these seven mistakes.
No. 1: Misplacing Your Closing Documents
All those documents you signed at the closing table? You need to keep them in a safe place since you may need them someday. The packet you received has important information like your mortgage note and title document. If you lose them, it can be difficult to get copies. File them in your office, lock them in a fire-proof safe, or store them in your safe deposit box.
No. 2: Falling for New Homeowner Scams
Sneaky criminals come up with new ways to bilk people out of their hard-earned cash every day. Be extra careful after you’ve closed on a home. It’s the perfect time for fraudsters to approach you with claims that you need to pay additional money, offers to perform repairs and renovations at below-average rates, or other untrue stories.
No. 3: Overspending on Furniture
If your new place is bigger than your previous one, you may be tempted to fill it with expensive furniture courtesy of your credit card. Avoid this urge at all costs. After all, you’re probably just getting used to your mortgage payment. Running up your credit card will just add more monthly payments for you to cover. Also, if you max out your credit cards, it can negatively affect your credit score. Plan your expenditures over the course of a year or so — and save up, so you can pay cash. Another option is purchasing quality second-hand furnishings at a fraction of the cost of new stuff.
No. 4: Refinancing Anytime Soon
If interest rates decrease after you close on your home, you might consider refinancing. And, while there are good reasons to refinance (reducing the length of your loan, landing a better interest rate after improving your credit score, getting out from under private mortgage insurance, etc.), there are also costs involved in refinancing. Refinancing too soon can defeat the purpose. Just stay the course and make your payments for at least a year before you consider refinancing.
No. 5: Irritating Your Neighbors
Neighbor woes have made many people miserable through the years. If you are partial to loud music, revving your motorcycle engine or noisy parties, you may want to tone them down once you move into your new place. Unlike a rental home, you’ll probably be living here for a while, and it’s not as easy to pick up and move. Set things on the right foot by introducing yourself to your neighbors. Be courteous about noise and get-togethers, and keep your yard tidy. Also be consciousness about shared spaces in the neighborhood. And, if you have a pet, don’t forget to pick up after them.
No. 6: Ignoring Needed Repairs
We get it: Buying a home can tap you out. However, you can’t move into your new place and never tackle stuff that needs to be fixed. Even if your budget’s tight, make a list of needed repairs and put a bit of money aside every month for them. If you’re handy, you can do them yourself and save money. If not, ask around to find a reputable handy person with reasonable rates.
No. 7: Becoming Unemployed
Right after closing is not the time to quit your stable job to freelance, start your own business, or just take a break. A positive cash flow is the best way to stay up to date on your new mortgage payments. Commit to your current job for the next year to ensure you can meet your new financial obligations. If you need a change of pace, add a side gig a few hours a week.
Closing on a home is an exciting time. You get to move into a new place, meet new people, and decorate it how you want. Proceed with caution, stay within your budget, and protect your investment by avoiding these costly mistakes.
