So, you took the plunge. You steeled yourself, got your accounts in order, and bought a house – congratulations! Buying a home is a big step that can have a major impact on your future financial security. But it’s not a “one and done” deal – purchasing a house is just the start of your homeownership journey.

So, what comes next? Colton Cooley, Director of Consumer Lending Sales with First Merchants, explains that home improvements and home maintenance are decisions that can be just as important as physically buying your home, and should be approached with thoughtfulness and caution.

“Homeownership is an investment, and it needs to be maintained and worked on for your investment to grow,” Colton shared. “Just like your savings account or stock portfolio, a house needs to be regularly reviewed and watched over. You’ll need to make changes to stay ahead of the curve, to add to it to help it grow, and to practice overall good management. Keeping your house in good condition is just as important as ensuring your mortgage is paid on time.”

So, how do you stay on top of home maintenance and protect your investment? Colton has some tips.

Equity

First, it’s important to understand equity. Equity is how much a particular piece of property or investment is worth after you subtract the amount owed on it. Houses and other properties build equity over time, as property values go up and debt is paid off.

“As housing market value increases, so does your home’s equity,” Colton explained. “Equity is an asset. Should you choose to sell, that asset becomes available to you to save, invest, or purchase another home.”

That value can be leveraged by homeowners to secure loans, lines of credit, or other capital when they need it most – or it can be factored into retirement savings if the homeowner plans to downsize or sell their house to help fund their golden years.

“Equity is also important for emergencies,” Colton added. “You can use the equity in your home by adding an equity line of credit to pay off emergency expenses such as medical bills, an unexpected home repair or debt consolidation.”

So, now that you understand equity, how do you protect it?

Planning Ahead

One of the most important things you can do, Colton said, is to build a budget.

“You want to make sure you have a solid financial budget that includes house upkeep,” he said. “So in addition to mortgage, utilities, gas, food, and entertainment, you’ll also want to factor your needs for cleaning and lawn care, as well as a pot for unexpected expenses.”

That last one is especially important. Houses require a lot of upkeep to keep them in good shape – so when things break, they need to be fixed as quickly as possible.

“Whether your water heater goes out, your HVAC system breaks, or a hailstorm damages your roof, having quick access to funding you’ve put away ahead of time can save you a lot of hassle later on,” Colton said.

Know What You’re Dealing With

When it comes to houses, an ounce of prevention is worth a pound of cure. And, according to Colton, that should begin before you even purchase the home.

“If you’re in the process of buying a house, you should always, always get a home inspection,” he said. “The report you’ll get will not only outline current issues that need to be repaired, but will also point out some issues that could arise in the future.”

Think of it as a “to do list” for your home. No one wants to start settling into a new home only to find out that the foundation is cracked, or that termites have also settled in. Knowing what you’re facing can help you bargain for a better sale price, or help you budget to get things fixed. It can also help you know if a particular house is even a worthwhile investment.

Be especially cautious if the inspection turns up any water problems – leaky pipes, a dripping roof, or an excessively damp basement.

“Leaks and water damage is not good,” Colton said. “It can lead to extensive repairs or a serious mold infestation. Keep your eye out and try to catch and remedy these problems early.”

In addition to an inspection, Colton also advises homeowners to ensure their house is up to code – that the outlets are updated, that the smoke and carbon monoxide detectors work, and that radon is at an acceptable level. Again, gaining equity may not be worth it if the home poses a hazard to you or your family’s health.

Think Outside the Box

You probably know that an out-of-date kitchen or an old roof can impact your home’s equity – but what about your neighbor’s yard? Colton said that there are several factors that can impact a home’s value beyond the obvious.

“Location can be a big factor,” he said. “Things like the number of foreclosures in the area, your neighbor’s letting go of their maintenance, to the condition of your yard – all of these things can impact equity.”

And, while many people will advise you to make improvements to your house to improve equity, Colton advises taking everything in moderation.

“You can actually negatively impact equity by over-improving your home,” he shared. “Don’t over-pay on the value of your home – both when purchasing and when doing renovations or creating additions. Adding a basement or an extra bathroom is great – but maybe not if it’s a $500,000 addition on a $200,000 home.”

Don’t Be Discouraged

Caring for a home is a lot like caring for a family member – it can be rewarding, but also overwhelming. The key to keeping both you, and your home, happy and healthy lies in planning ahead, Colton said.

“Homeownership is a rewarding journey, but it will keep you busy,” he said. “But as long as you plan ahead for needed repairs, and budget for unexpected ones, it can be relatively low-stress. And, most importantly, it’s not a journey you have to take alone. There are multiple licensed professionals that can assist you with home repairs and upkeep – ask for trusted recommendations from your realtor, neighbors, family, and friends. And we, your dependable, attentive bankers, will be with you, every step of the way.”

Need to finance repairs? Check out our blog to learn what kind of financing might be right for you.

Want to learn more? Meet with one of our knowledgeable, welcoming bankers today!