A Financial Plan for Your Home

Your home is one of your biggest investments. So you should manage it carefully. You should have a financial plan that includes your mortgages, insurance, repairs cost and taxes

 1. The mortgage: Pay it—and then some

1) Less debt means more money to spend later.

2) It feels darn good to own your house outright as soon as possible.

3) Minimal tax loss. Toward the tail end of the life of a loan most of your payment goes to the principal, not the interest, so you’re getting only a small tax break anyway.

Of course, if you’re still saving for retirement, put the 100 bucks toward.

a) A retirement plan

b) An account for the inevitable home repairs

c) An account for discretionary improvements, which can raise your home’s value

2. Insurance: Protect your property

1) Homeowner’s insurance: it covers loss or damage to your home.

2) Liability coverage. It protects you from a lawsuit if someone gets hurt on your property,

3)Various disaster insurance policies: Optional policies cover catastrophes. You can buy flood insurance, but first, you need to have your standard policy already place

·         If you make structural improvements, such as adding storm shutters, your insurer may give you a break.

·         If you belong to certain groups, such as AARP or veterans’ organizations, your premiums may be lower.

3. Repairs and renovations: By choice or necessity? 
Part of your home financial plan, should prepare to be to spend 1% to 3% of the market value of the home annually on maintenance. Here are some estimated life spans:

1) Roof: 20-25 years

2) Heating systems: 15-20 years

3) Range/ovens: 11-15 years

4) Water heaters: 8-13 years

Then get estimates on what replacements will cost and start saving. 

4. Taxes: (Almost) no way around them

Even if your lender handles your property taxes from an escrow account, you need to budget for them in your home financial plan. They creep up almost every year, it seems. Take responsibility for tracking the changes in your area: Look over past tax bills to get a sense of how quickly they’ve risen in the past. 

If you want to reduce your tax there are some ways to get a reassessment. Do your homework first: Are comparable houses taxed less than yours? Ask the local assessor what formula is used to set tax rates. You can challenge the assessed value and get yourself a rollback.

I hope this information is useful.

Should you need assistance with any of your real estate needs, please contact

Supreme Manor Real Estate Services 773-881-9224. 

Have a Supreme Day!

Sheila M. Wilkinson-Sanders