As a new homeowner, you prepare for a monthly mortgage payment when purchasing a home. Yet you may fail to consider some of the other home expenses that tally up quickly when maintaining your own property. To ensure you can afford to own a home, it’s a good idea to create a checklist of potential expenses before you begin searching for homes.
Property taxes, insurance and fees
Almost all local U.S. governments charge property taxes, which are based on the value of your property and your state’s property tax rate, notes Tax Policy Center. Many mortgage companies will collect taxes and hold them in escrow on your behalf by adding one-twelfth of the estimated amount due to your monthly housing payment. Home insurance is another new expense for owners. In addition to insuring personal belongings inside of your house, you also need to insure the structure of your home. Other fees, such as homeowners’ association dues, are another new expense often incurred by new homeowners.
Sometimes, just the cost of moving into a new home can blow a budget. There are closing costs when you finalize your mortgage. If you’re relocating a far distance, you will need to pay to transport all of your belongings and automobiles. Changing the locks on your new home is another added expense, as are activation fees for utilities. And, of course, you need to fill up your new home with any necessary furnishings or appliances you did not own when you rented.
Ongoing care and maintenance
The experience you gain in the first year of owning a home helps you to develop an accurate budget for ongoing care and maintenance. During these first months, many new homeowners discover a host of unexpected costs. Yard work and grass cutting must be done, either by purchasing the necessary equipment (tractor, weed whacker, new plants and trees) or by hiring a landscaper. Older items break down and may cause expensive repairs, especially if your buy a home over ten years old. Keep an eye on heaters, air conditioners, hot water heaters and appliances, and set aside emergency funds for plumbing breakdowns or other home repairs.
Learning how to budget and care for a home takes time, but advanced preparation can help. In addition to your mortgage payment, planning for the ups and downs of unexpected expenses can make life more manageable as you begin your journey into homeownership. And, once you think you have everything under control in regards to home expenses, it will be time to begin thinking about upgrades and renovations.
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