Buying your first home can be a fantastic experience. With no landlord to answer to, you can do as you please. The real value of your home is the ability to make lasting memories as you watch your children will grow up. Unfortunately, it makes losing your home much more than a financial loss. It can be utterly devastating.
Contrary to popular belief, you can lose your home at any time. In fact, with the current economic climate and financial habits, more people are losing their homes than ever before. And it doesn’t take much.
Not Enough Insurance
It seems like most homeowners are on a tight budget these days. Everyone is saving their pennies and stretching the ones they do spend as far as possible. Sometimes, this means essential items such as plumbing coverage and house insurance get put on the back burner. And we all know what happens next.
One morning, you wake up to a broken pipe or a fire. Your beautiful home now needs extensive repairs that you can’t afford. And to make matters worse, you’ll have to stay elsewhere until the repairs are completed.
If you had plumbing coverage in your homeowners’ insurance, a few phone calls would put everything in motion. Some plumbing cover providers even pay for your hotel stay. But, if you thought it was something you could live without, you’ll quickly realize the importance of additional insurance like plumbing cover.
In our first home we thought we had decent homeowner’s coverage, but when a tree fell on the roof, breaking through into our bedroom during a hellacious storm, we learned that the roof was covered but the damage created by the rain that came through the roof was NOT covered because our Dwelling Coverage was too basic.
Without coverage, you’ll find it difficult to get pay for the cleaning and repairs. And if you can’t afford it, you’ll have limited options. Do you live in an unsafe home? Beg and borrow to get it all fixed? Or, will you stay and try to fix things as you can afford it?
Many homeowners discover they can’t withstand this type of financial burden. Their home falls to ruins, and they often lose their homes as a result.
Inaccurate Household Budgets
When considering the affordability of a home, people often only look at the size of the mortgage payment. This sounds fine at the start, but you’ll soon discover you forgot to include things like legal fees, utility setup charges, moving costs, homeowners association fees, and administration fees.
These might seem minor at first, but when you add them up, they can eat a significant chunk of your budget and leave you scrambling for cash.
Monthly expenses such as utility costs, property taxes, repairs and the extra resources you’ll need to keep your house and yard in tip-top shape also need to be figured into your budget. If you don’t, you won’t be able to live in the home you’re paying for.
No Savings or Emergency Fund
We don’t like to think about bad things happening to our loved ones, but they do, and they come at a high cost. Even if your medical expenses are covered, you could still have several other expenses such as hiring a caregiver or a handyman, paying for delivery and specialized transportation.
When you combine these unplanned expenses with the loss of income, your cash will disappear quickly. And if you have no savings or emergency fund, you’ll be missing house payments sooner than you think. Miss enough of them and you’ll never recover. You’ll lose your home and the comfort it brings.
No insurance, lousy budgeting, and no savings are just three common ways families find themselves on the streets. Don’t let it happen to you. Make sure you can enjoy your home for as long as you’d like to have it. Prepare for everything and plan for the worst.
And who knows? Save enough emergency money together, and you might even get enough extra for an affordable family vacation.