Now That You Have a
Mortgage, Keep it
Whether it is your first home or a move-up, careful
planning and budgeting are the keys to meeting your new
financial obligations. Problems you once turned over to
the landlord (or your parents) are now your responsibility.
If it is a move-up, the expenses of maintaining a larger
home often grow along with its size. Planning for the
routine costs of owning a home as well as the unusual
situations can help you avoid foreclosure or bankruptcy
when emergencies arise. Be prepared for homeownership:
Add the unexpected to your budget.
The expense of owning a home goes beyond monthly
mortgage and utility payments. Home buyers with
minimal cash reserves can find themselves in financial
difficulties. Here are some common reasons:
• Failures in plumbing, electrical and heating systems
(which seem to occur at the worst possible times)
must be repaired.
• In older homes, complete replacement of water
heaters, furnaces or kitchen appliances may be
needed and can be expensive.
• Even newly built homes require landscaping,
interior decoration and furnishings.
The budget you created before beginning your home
search should have included these expenses. If it did not,
you need to accumulate adequate reserves to deal with
the above as well as with emergencies or to make your
mortgage payment in case of illness or loss of income.
In the meantime, know what sources of financing
are open to you in an emergency — you may have to
use a home equity loan, a second mortgage or an
installment loan.
When Is a Mortgage Delinquent?
Payment is considered late if the lender receives it after
the due date set in your mortgage. A history of chronic
lateness will harm you if a real emergency occurs.
Serious consequences begin when a payment is more
than 15 days late.
• AT 15 dAYs lATe. The lender usually charges a late
payment fee (the timing and amount of late charges
vary from lender to lender).
• Two or More MorTgAge pAYMeNTs owed. Unless
specific arrangements are