Buying a home is one of the most important steps that you can take on both a financial and emotional level. Being a homeowner has certain advantages that can make it appealing, but there are also obligations of which prospective homeowners should be aware before moving forward. You should make sure that you are ready to undertake these obligations and understand what they involve on a practical level.
Protecting and Improving the Value of Your Home
Once you buy your home, you may want to develop it as an asset. Even if you think that it will be your home for life, you may eventually decide to sell it. Or you may want to pass it on to your family members or other heirs in a better condition than when you acquired it. If you are uncertain about the value of your home, you can arrange for an appraisal to give you a sense of how it compares to similar properties and what you can do to improve it.
Depending on the scope of the improvements and the sophistication of the required tasks, you will want to decide whether to handle them on your own or hire a contractor. Any project that involves safety risks, a risk of substantial property damage, or technical expertise probably requires the assistance of a contractor, while homeowners often can handle routine maintenance and improvements that affect a limited area. You can consider improving not only the interior of your home but also external areas like the lawn or backyard.
A home will no doubt need some sort of repair every year, from replacing a cracked tile to installing a new roof.
If your home requires repairs, you should act promptly to make sure that its value does not depreciate and that further damage does not occur. You may be able to handle minor repairs on your own, but a contractor should address serious damage from storms, floods, or fires, as well as major repairs to a foundation, roof, or other structural elements.
Most homeowners purchase homeowner’s insurance to cover the costs of accidents and damage that occur on your property. You should carefully read the terms of a policy so that you understand what is and is not covered, since you may have several options among which to choose. The deductible may vary for different types of risks, so you may want to know the specific deductible for a specific risk.
This type of insurance generally covers personal injury claims brought by guests who are injured on your property. To avoid this litigation, however, you should try to keep track of any dangerous conditions that develop on your property and fix them, block them off from guests, or warn guests about them. If you have a special feature like a swimming pool, which poses certain hazards, you should understand your safety-related responsibilities to others who might encounter or use the feature. You might need to put a fence around a pool, for example, as some states require by law.
Keeping Up with Mortgage Payments
Mortgage payments cover not only the principal but also interest on the loan and often property taxes and homeowners’ insurance.
One of your most important obligations as a homeowner consists of paying off your mortgage. If you fail to keep up with your payments, the lender can try to collect by garnishing your wages. They can also foreclose on the property, which means that they can repossess and sell your home. You should make sure to review the terms of the various mortgage options that you are considering so that you choose a mortgage that meets your financial needs and goals. For example, some mortgages require lower payments each year but take more time to pay off, while other mortgages take less time to pay off but come with higher payments or a very large payment at the end of the loan.
You may consider refinancing if interest rates go down during the period of the mortgage. This can help you reduce costs if you have kept up with your payments thus far. Once you pay off the mortgage completely, you should get a release deed from the lender and record it to show that you have satisfied this obligation.
Meeting Tax Obligations
Homeowners may need to pay both real estate taxes and assessments. While real estate taxes are based on the value of the property, assessments are based on a benefit that the property receives from the government. Taxes can account for up to a quarter of the costs associated with owning a home. Some states limit the amount of tax that can be assessed or the government’s ability to raise the tax. Certain types of property or property owners may receive exemptions, which lower the tax, or abatements, which remove the tax obligation altogether. If you disagree with the valuation of your property for tax purposes, or if you believe that you should have received an exemption or abatement, you can challenge these issues through the assessor’s office.
Resolving Disputes with Neighbors
If you live in an area with several other homeowners around you, situations may arise in which your neighbors undermine your quality of life or your ability to enjoy your property. While you can go to court to resolve these conflicts, you may want to seek a less formal resolution that allows you to preserve a good relationship with your neighbor. Sometimes you can meet your neighbor to discuss the issue and find a compromise, or you may be able to reach an agreement with the help of a mediator. Boundary disputes can be more complicated, however, and may require the intervention of courts to determine rights of ownership or access to a certain slice of property.
Complying with Zoning Laws
When you bought your home, you probably investigated the zoning for the area to ensure that your use of the property would comply with any local ordinances. However, there may be aspects of these ordinances that affect you after you move into the home. If you want to remodel your home or add a few rooms, you may need to make sure that zoning rules permit this project. In some cases, though, you may be able to apply for a variance, or exception. You can also potentially challenge the ordinance that conflicts with your plans as unconstitutional, although this is a more sophisticated argument that probably requires the help of an attorney.
CC&Rs = covenants, conditions, and restrictions
Subdivisions, condominium complexes, and other types of planned communities usually impose their own rules, often known as CC&Rs. These go well beyond zoning ordinances in controlling what a homeowner can do with their property. Sometimes they can cover issues as specific as the color of paint that you can use or the style of your roofline. If you want to have more freedom, you should think twice before buying a home in a planned community. Otherwise, you should make sure that your plans comply not only with ordinances but also with the CC&Rs.