You want to make sure your “Home Sweet Home” stays that way once you’re actually a homeowner, right? Well, you can avoid any nasty surprises if you budget now for any extra costs — some predictable, some unexpected — that can occur when owning your first home.
Buying a home requires money first for a down payment and closing costs (and the move!), but don’t forget you need to be prepared for other costs that may come up monthly, quarterly, yearly and beyond. Make sure you spend time estimating these costs and include them in your entire “home-buying budget” so you have a clear idea of what you can truly afford.
Local prices and estimates can vary on where you live. Look for help from your agent, neighbors, and friends to see what the “going rate” can be for some of these items:
· Insurance — Before you can get a mortgage, most lenders will require you to show proof of homeowners insurance. Premiums vary depending on where you live and the size, type and age of your home. Plus, it can be extra if you live near the coast or a flood plain. Shop around for a good price; sometimes you can get a better deal with the same company that insures your car.
· Property taxes — Property taxes are based on the value of your home. So the more $$$ for your home, the higher the taxes. You’ll have to pay state property taxes and sometimes county or city property taxes, too.
· Utilities — As a renter, you may have never even dealt with these bills, but you’ll now have electricity, heat, and water bills on a regular basis. Sometimes your agent can give you an idea of an average monthly or quarterly cost for a particular home before you buy.
· Condo or co-op charges and homeowners association fees – It will depend what type of building or community you live in, but these costs need to be part of your budget. Fortunately, you can get the exact fees before you buy but also be aware they could rise if your building/community takes on a major maintenance project and needs funding from fellow owners.
· Appliances – Double check if the washer/dryer, refrigerator and other kitchen appliances will stay when you purchase your home. It’s never a guarantee!
· Yard work and outside maintenance – Whether you hire someone or not, gutters need to be cleaned, your lawn mowed, leaves raked, and trees trimmed if you live in a home with a yard. Don’t forget about aeration, fertilizer, and seeding too! Plus, if you’ve gone from being yard-free to having a yard, you may need to budget in the purchase of a lawn mower, garden tools, rakes, snow shovel, etc. for that first year.
· Critter Control – Many homeowners in the DC area purchase regular service from companies that can help with various pests inside and outside of the home.
· Chimney Sweep – Always a good idea to get this cleaned yearly if you plan use it regularly.
· Furnace/AC and Water Heater – As a homeowner, it’s good to have a contract with a service provider who can provide annual maintenance on these units before the cold or hot weather hits, and who quickly responds when an emergency strikes and you are without heat or AC!
· Furniture and Paint – You just moved into a much larger place and want to make the place yours and reflect your style, right? That requires a budget for new furniture, lamps and lighting, rugs, and paint. You can sometimes make do for a while, scan flea markets, or borrow from family as you plan ahead for a big purchase.
· Future Repairs and Replacement – The longer you live in your home, the more likely you’ll need to replace something at some point! Make sure you know the age of your appliances and units before you purchase a home so you can forecast when some may need replacing. Some key lifespans include: roofs 25 years; furnaces 18 years; and hot water heater 12 years.
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