How do you handle Albuquerque home-related expenses? If you just pay them as they come along, you may be missing opportunities, such as being able to make upgrades. But worse, you could end up in financial trouble if a bunch of surprise expenses hit you all at once. Now is the time to look closely at what it costs you to operate your house and set up a financial plan.
Here’s how to manage your home finances:
The Mortgage: Pay It — and Then Some
You may already pay plenty each month for your mortgage in Albuquerque. But is there room to pay more? Even if you pay a small amount more each month, it can help you pay off your mortgage earlier. For example, if you have $200,000 in outstanding principal and a 20-year fixed-rate mortgage at 5%, your monthly payment is $1,319.91. But if you can manage to pay another $100 a month, you’ll save $14,887 in interest. That’s a large chunk of change that can go to other expenses or purchases.
Insure Your Property
There are several types of insurance that will help protect your investment:
- Homeowner’s insurance. This is the basic coverage for your entire Albuquerque home and all your possessions in it.
- Liability coverage. This protects you if someone is injured on your property.
- Various disaster insurance policies.
Repairs and Renovations
Now that you own your home, you’re the one who has to pay for all the repairs and supplies. A rule of thumb is that you should be ready to spend 1% to 3% of the market value of the home annually on maintenance. You can take this guideline and set up a savings account and build it up until you reach that amount.
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. Or if your lender handles escrow and you haven’t saved your bills, ask for an accounting.
You can generally deduct property taxes on your federal return. A tax pro can tell you how much of a tax break you’ll get, to help you fine-tune your home financial plan.
Need help finding the perfect home in Albuquerque? Our powerful home search tool can help you find the right home to fit your budget. And make sure to come back to our blog twice a week for more local articles about living in Albuquerque and real estate advice. Follow us on Facebook for all the latest Albuquerque real estate listings!
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