As a first-time homebuyer, you know that paying for a home means handling a monthly mortgage payment. You’ve probably saved up a balance to cover closing costs, too. But after settlement, many new homeowners are surprised by hidden homebuying costs they didn’t expect. To help set a budget for your first home, here’s a checklist of 10 items you should be aware of before buying.
Total Monthly Housing Payment
In addition to a mortgage, you may also need to make other monthly payments associated with your first home. Don’t forget to budget for real estate taxes and homeowners insurance, which are sometimes paid from an escrow account that’s incorporated into your monthly mortgage payment. You also may be required to pay for private mortgage insurance (PMI) if your down payment was less than 20 percent of the purchase price of your new home. If your home is part of a homeowners’ association or condominium owners’ association, you’ll also need to pay dues on a regular basis – monthly, quarterly, or annually.
Depending on the size and distance of your move, you may need to hire a company to transport your furniture and personal items. The cost of packing materials like heavy-duty boxes can add up quickly.
Increased Utility Bills
A larger living space means you’ll likely spend more on energy bills, in addition to up-front fees required to set up service. If you need to install light fixtures, look for energy-efficient options with LED bulbs to save money. An older home may require more ongoing maintenance or even need a new heater or air conditioner, so be sure to have a professional inspect the HVAC systems before closing.
When you’re a homeowner, everything that breaks in your house is your responsibility. Repairs take time and money out of your household budget. Minor items you might not have noticed on the final walk-through may irk you when you live in the house full-time, and you’ll want to take care of these small fixes as soon as possible.
Although many buyers have difficulty seeing through dated home decor, cosmetic upgrades are some of the easiest renovation projects. If your first home needs a modern touch, don’t forget to budget for cosmetic upgrades like paint or area rugs. You’ll be a lot happier in your new home if you can add your own style choices.
Your first home means you’ll have a lot of rooms to furnish. Set aside a budget for new furniture like a dining room set or a guest bedroom — these are areas you might not have had in your previous home, especially if you were renting an apartment or townhome.
If you’re purchasing a brand-new home, expect to provide your own window treatments for privacy. Measure the windows ahead of time, if possible, and make sure you have the budget to buy curtains or blinds you’ll be happy with.
To truly make a living space your own, you’ll need finishing touches like pictures on the walls. Give your new place a more lived-in look by adding personally selected items such as art, backsplash tiles or new cabinet hardware. These small additions really make you feel at home in your new space.
If you’re a heavy tech user, you’ll want to budget for automated features that can be installed in your new home. A security system, home theater elements and programmable thermostats are just a few of the many automation options that can maximize your enjoyment of your new house. Even if you’re comfortable staying lower-tech, you’ll want to factor in the cost of connecting internet service and cable TV.
Lawn care is a new experience for many first-time homeowners. Decide up front if you’ll purchase a lawn mower or hire a landscaping service. If the lawn and trees are newly planted, watch them carefully to make sure they’re properly watered and fertilized until the landscaping is well-established.
Although many homeowners don’t think about the extra costs associated with buying their first home, a simple checklist of potential expenses will help you to prioritize and budget for the shift from renter to owner. You may not be able to do everything at once, but as you become accustomed to homeownership, you’ll get a better feel for what’s important to you in your living space and spend your money accordingly.
Guest Author Bio: A 25-year real estate veteran, Phil Karp is Senior Manager of Brokerage Services at Owners.com, an online resource that makes homebuying and selling easy and affordable. Phil prides himself in preparing first time buyers for the responsibilities and costs associated with buying a home.