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May 10 2021

Offer Accepted!

Blog

May 10, 2021

Iris Buczkowski

There is one undisputable fact I think we are seeing today that almost nobody can disagree with.  The real estate market is currently HOT, HOT, HOT!  In Upstate New York where we are located, we have always been insulated from the huge dips and swings of the real estate market.  Today though, it seems as if houses are being sold faster than they are being listed and the turnaround time on seller listings has declined significantly.  Furthermore, demand is high given that mortgage interest rates continue to be low so folks who are selling their homes are often getting their asking price or better because buyers are taking on bidding wars.  It is a great time for buyers and sellers alike!

When you are purchasing a new home, whether it is your first home or not, you are going through a major life change and it is the perfect time to look at your overall financial situation.  This may mean an upgrade for you, or maybe a downgrade toward simplicity, but no matter what the circumstances may be, here are a few tips that any homeowner can benefit from:

Create A New Budget and Build Your Reserves. With a new home comes a whole new budget!  After you get settled – and don’t procrastinate – look at each category in your budget that is likely to change.  Think of the everyday things like electric and heat, and the bigger ticket items such as homeowner’s insurance and property taxes.  Outline a plan that allows you to accommodate these changes so you don’t have unexpected surprises when the bills start coming in.  Also, be sure to add an “emergency reserve” to your itemized plan!  You should have about 6 months’ worth of expenses saved as an emergency reserve fund in case life throws you a curveball or something expensive with the house needs to be repaired

Avoid Overspending. Having a new home should not be a blank canvas to create a brand-new masterpiece.  Be mindful of what you need for your home versus what you want.  If you have saved for new furniture that is great!  But don’t go out and drain your bank accounts or overextend your credit to put a TV in every room with a state-of-the-art home theater system.  Be mindful of your spending and recycle things you already own into your lovely new space.

Review Your Contingency Plan. With a new home comes new responsibilities and one very important one that consumers forget is to make sure your home and family are protected.  You should review the amount of life and disability insurance you carry in case you were to pass away unexpectedly, have an accident, or develop an illness that prevents you from earning an income.  Term life insurance is very inexpensive and will financially protect your family.  Disability insurance allows you to have positive cash flow in the event you are unable to work.  Also, make sure your legal documents are in order and you have a will.  You worked hard to make this purchase!  Make sure if you are no longer here that it is transferred to your family or other heirs in a manner you are comfortable with.

Keep Good Records. Be sure to keep records and receipts for all improvements and upgrades you do to your home.  Make a list of contractors you have hired and a record of all major purchases, such as appliances, windows, heating equipment, etc.  This will help the resale value of your home at some point in the future if you upgrade (or downgrade), and the new owner will become your best friend since you created a book of all your home’s secrets and who can help with them.

Hire an Accountant. You might have been accustomed to doing your own taxes, but now is a great time to consult an accountant to help make sure you are taking advantage of all the deductions and credits available to you as a homeowner.  Since the tax laws may change on an annual basis, it’s prudent to have advice from somebody who pays attention to them all the time.  Why pay the government if you don’t have to?  Tax savings can go back into your pocket for that pool you want to have installed or the landscaping upgrade you have been wanting to do.  Or you can use the savings to pad your retirement account so you can stop working earlier and enjoy your new home more!

It does not matter which side of the equation you are on in when you are on in a real estate transaction, the sweetest words everyone wants to hear is “offer accepted!”  Once those glorious words are heard it’s time to get to work on the tasks outlined above.  Don’t let it overwhelm you!  Find the right partners to help guide your financial plan and you will be in excellent stead to reap the rewards of your hard work and enjoy the biggest purchase you have likely ever made.

Iris Buczkowski is the founder of Birch Wealth Management (birchwealth.com).  Original content provided by Iris is for educational purposes only and should not be construed as investment advice.

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