Being a fiscally responsible homeowner starts with paying your mortgage on time, every time – but that’s just the beginning of protecting your investment. The best way to be prepared for the expected and unexpected costs of homeownership is to continue to budget and save.

Insuring your home

As a requirement of your mortgage loan, you probably had to obtain homeowners insurance.

In some cases, lenders will escrow money from your mortgage payment each month to cover the annual renewal of your homeowners insurance premium. But if your lender doesn’t set aside money to renew your homeowners insurance, you’ll have to budget and save for it on your own.

You'll want to occasionally review your coverage levels to make sure your home is adequately protected.

Budgeting for maintenance

Routine maintenance, unexpected repairs and improvement projects – in addition to your new mortgage payment – require you to budget and save faithfully. You'll need to learn about what it will cost to maintain your home’s mechanical systems and construction so you can budget for their upkeep. Repairs that occur after you sign the closing documents are generally not the previous homeowners' responsibility.

You may also face some initial expenses that you may not have thought about, such as:

  • Lawn and garden equipment
  • Snow removal equipment
  • Pest control
  • Power tools
  • Appliances
  • Trash cans
  • Charges for sewer, water and/or trash collection

Continuing to fill out your monthly budget worksheet will help you plan and save for home improvements and repairs.

Establishing a rainy-day reserve

No one buying a home wants to think about losing that home. But the reality is that recessions, layoffs, illnesses, injuries or deaths could dramatically affect anyone's financial picture with little or no warning.

Experts suggest that you build a reserve of 3 to 6 months' living expenses. It won’t happen overnight, but you should make it your goal to establish such a reserve as soon as possible once you own a home.

It’s very important to continue to keep a budget once you own a home. Keep using the monthly budget worksheet, especially if there’s a change in your financial situation. Monitor your monthly bills and use credit cards wisely.

Getting help for financial trouble

If you do experience unexpected financial difficulty, don't be afraid to ask for help. The worst thing you can do is wait until you’re so far behind on your payments that your creditors resort to collection agencies.

If you’re unable to make your monthly mortgage payment, the best thing you can do is to contact your lender. Many lenders will work with borrowers who have a good payment history to arrange a temporarily reduced payment plan until they get back on their feet. You can also contact a professional financial counselor or a credit- and budget-counseling agency if you need help developing a budget/debt reduction plan.