Before you get down to the details of purchasing your first home, it’s important to know what costs are waiting beyond the horizon. The average homeowner in the U.S. spends an additional $9,080 each year covering unexpected or forgotten costs.
Don’t get surprised by the unforeseen costs of owning a home. Here are some expenses you should factor into your budget during your homebuying journey.
Costs You Should Keep in Mind
Property Taxes: Some first-time home buyers might not be aware of this cost, but it’s important to keep on your radar. Not sure how property taxes work? Property taxes are determined by your home’s worth, multiplied by your local tax rate. If your home is worth $300,000 and your local tax rate is 1.5%, your property taxes would be $4,500.
Homeowners Insurance: This cost is a necessity, and typically an added monthly expense. Homeowners insurance assesses the value of your home and belongings in case of losses and damage due to fires, storms, or burglary. It’s also important to note that you’ll normally need a separate or additional policy for floods, earthquakes or hurricanes. If you live in an area where these natural disasters occur, it’s important to take precautions for your property.
Utilities: When you’re moving from your cramped one-bedroom apartment into a comfortable 4-bedroom home, you’ll likely experience a rise in your utility bill costs. Some bills that may have normally covered by your landlord when you rented, like garbage collection, are sometimes overlooked by renters when they make the jump into homeownership.
Costs that May Catch You by Surprise
Home Maintenance: Unlike renters, homeowners take on all costs associated with their property like plumbing leaks, gutter cleaning, HVAC repair/inspection, pest treatments and lawn care. It’s estimated that the average monthly cost for home maintenance is $1,200. Some of these costs, like lawn care or gutter cleaning, can be reduced with a do-it-yourself approach. It’s best to let the pros handle things like plumbing issues and pest control.
HOA Fees: A homeowners association fee is an amount of money that must be paid monthly by owners to assist with maintaining and improving properties in the association. Fees normally depend on what your HOA provides to the community like tennis courts, a community clubhouse or neighborhood parks to maintain. Take this potential cost into account when searching for a home. Ask your realtor if the home you’re interested in is a part of a HOA and what their costs and benefits are. This way you can plan for this cost prior to the purchase of your home.
Furniture: If you’re moving from an apartment to your first home, it’s more than likely that you won’t have enough furniture to fill up your new space. From guest bedrooms to breakfast nooks, finding the right pieces can add up. If you’re looking to save on costs for new furniture, don’t try to fill up the space at one time! Take a few months to get everything situated at the right price.
Appliances: Another cost that might catch you off-guard is appliances. Renter’s normally get the luxury of not having to supply their own appliances and having a maintenance team on call when an appliance is acting up. As a homeowner, you’ll have to take on the costs of upgrading or replacing costly appliances like refrigerators, washers, dryers or dishwashers. Costs like these can add up! If you opt for basic appliances, costs are still high. Not to mention, if an appliance is on the fritz, you’ll need to bring in a professional for repairs.
If you’re a first-time home buyer be sure to keep these costs in mind when you’re searching for the right home. Have a question on costs? Connect with a loan officer today to learn about what really goes into owning a home.
*PrimeLending is not authorized to give tax advice. Please consult your tax adviser for tax advice for your specific situation.
