(800) 713-0463
"Providing Service Nationwide!"

How to Protect Your Investment When Buying Real Estate

Buying a home is probably the largest purchase you will ever make. Most people only buy two or at most three homes in their lifetime. Once you make the purchase, itís important to protect your investment in case you ever need to move on. There are a few steps you can take to help your home hold its value over time.

1. Set aside six months of living expenses in an emergency fund. You never know what will happen at work or with your health, and your home will still be there, requiring maintenance and mortgage payments. Factor in everyday things like lawn care when you figure out your expenses.

2. Examine your homeownerís insurance policy (or get homeownerís insurance if you donít have it!) to see if you can get a reduced premium by taking certain steps to protect the property. Some companies will cut your rate if you have an alarm system, or if you install new smoke detectors, for example.

3. Get flood insurance. Most homeownerís insurance policies donít cover floods, but floods are one of the leading causes of damage to homes. This is especially important if you live anywhere near a body of water.

4. Donít use your homeís equity to make random purchases. If you take out a home equity loan and end up unable to pay it, you could lose the home.

5. Get a home warranty. Your realtor can recommend a reputable company. A home warranty usually costs between $200 and $300, and it will cover the costs of common repairs around the home. Some companies allow you to add to the warranty in certain specific home areas, like your pool or roof leak coverage. Home warranties cost far less than many common home repairs.

6. Donít delay minor repairs to important parts of the house. If you know you have a plumbing leak or an electrical problem, take care of it. Those sorts of issues can lead to major damage, like rotted wood or mold, or even fire. Stay on top of your homeís maintenance.

7. If youíre buying new property, factor in the cost of monthly maintenance into your budget before you start looking for a home. Find out how much people in your area spend on average for maintenance (your realtor might know this), and keep that in mind when you apply for a loan.

8. Avoid new debt for a year. After you buy a house, stop buying things! See how your mortgage payments, monthly expenses for maintenance, insurance payments, etc., feel in your budget before you take on more monthly payments for other debt.

9. Consider automatic bill pay on your mortgage to ensure youíre never late on the payment, especially if you tend to be forgetful.

10. Take proper fire precautions. Keep fire extinguishers in every room, and make sure your smoke detectors are in working order. Keep the batteries fresh. Proper fire precautions may help you contain the fire if one does break out, reducing damages to just one area of the house instead of losing the house altogether.