Paying the bills

November 5, 2012 -

Buying a home is an important investment that comes with many new financial responsibilities.

Paying the billsYou’ll need to understand and prepare for all of the costs associated with buying a home, including mortgage payments, property taxes and insurance, as well as operational and maintenance fees.

Depending on your preferences, you can set up a mortgage payment schedule with your lender for either monthly, bi-weekly or weekly payments. But, no matter which schedule you choose, it’s important that you always make your payments on time. You will want to avoid being delinquent on your payments, including late charges, because this can negatively affect your credit rating and could even lead to very serious consequences, like foreclosure. If you are having trouble making payments, always discuss the situation with your lender.

Setting up a monthly household budget and sticking to it will also help you stay on track with your payments. Canada Mortgage and Housing Corp. (CMHC) has an online Household Budget Calculator available at www.cmhc.ca. Once a month you can review your spending and see if you are meeting your financial goals. If you find that you are spending more than you earn, you will need to find new ways to save. If you are having trouble sticking to your budget, ask a professional money manager for advice.

Ongoing costs

Maintenance, repair, and renovations are additional costs on top of your mortgage, taxes and insurance. You’ll need to inspect your home regularly and replace or repair parts and materials that wear out. You can use CMHC’s Home Maintenance Schedule (www.cmhc.ca) to inspect your home on a regular basis and develop an ongoing maintenance practice that will help you protect your investment.

As your home ages, it will likely need major repairs such as a new roof. Although you can plan for these types of repairs, and include them in your budget, many repairs are unexpected and can sometimes be costly. It helps if you set aside an emergency fund to deal with unexpected problems ranging from major repairs to illness and job loss.

At some point you might also want to consider renovating your home or making improvements. Think about getting your home energy rated to find out how you can improve its energy efficiency. Some energy-efficient renovations can practically pay for themselves, especially if they result in savings on utility bills, a higher selling price and greater comfort and enjoyment in your home.

Finally, there may be other costs as well, for example a security alarm, snow removal or gardening. If you have a condominium or strata, some of these expenses may be included as part of your monthly maintenance fee.

CMHC’s Homebuying Step by Step: A Consumer Guide and Workbook offers many more financial tips and will lead you through the homebuying process in five simple steps. Get your free copy at www.cmhc.ca or call 1-800-668-2642. For more practical tips and helpful advice on homeownership, sign up for our free electronic newsletter at www.cmhc.ca/enewsletters.

– Mark Salerno is the corporate representative for the Greater Toronto Area at Canada Mortgage and Housing Corp. You can reach him at 416-218-3479 or e-mail him at: msalerno@cmhc.ca.

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