Homeownership may start with a down-payment and applying for a mortgage, but that is just the first part of the process. Many first-time homeowners forget about all the additional costs associated with owning a home during their investigations into mortgage financing, interest rates and monthly house payment, to get an idea of what their monthly budget might look like.
Apart from potential fees such as a Homeowners Association (HOA) and the utility costs (Buyers might find cooling or heating a house is more costly than an apartment!), and, general maintenance, which typically can average out to about 1% of the value of the home annually, monthly fees can rack up. This is especially true if you have some updates planned. You never know what surprises might lurk inside that wall you planned to take down or what other unforeseen costs could be coming down the road.
If you are first-time homebuyers, we hope you have gotten your home inspection and have a thorough report as reference, as well as the inspector and your realtor to consult in case a repair is needed.
Also, not shorting your future cash reserves, by putting down more than necessary as your downpayment, is key when making your offer, because even new homes will need some additional cash expenditures. Every new home will not come with window blinds, shades, draperies, and, even if you have all the furniture, old items may no longer work with the layout of your new home. There will always be unexpected expenditures, and, you may need new equipment and supplies to handle yard work you didn’t have previously.
Several things to keep in mind for new home-buyers are what mistakes to avoid once you own:
- If you have an issue arise, make sure you call the correct person for the job. If the repair person doesn’t have a specialty in fixing what is broken, you could be throwing good money after bad. Since specialists can cost as much or more than $135.00 an hour, knowing some information in advance can help you can keep your costs down and better understand if you have the right person for the job. Doing some basic research in advance may help you explain the issue over the phone and ensure you understand the nature of repairs. This can help you nail down the right person for the job and nail down factors such as how long it might take to fix and what your potential expense might look like.
- Get a referral from a trusted source, such as your realtor or your home inspector for a good contractor. You need someone recommended by others, preferably with some good reviews. Even your neighbors might be a good resource for tried-and-true vendors, depending on what you need, so, keep that in mind before you go online so you have a basis for reference.
- On average, home maintenance can cost about 1% annually of the home’s value. You may not spend 1% annually, but, saving for the big-ticket maintenance items, such as; a new roof, new HVAC or a new driveway or siding, will help you plan for those years where you spend more. Many Buyers decide to purchase an annual Home Warranty to offset some of the repair costs. Recently one Buyer was able to get a new water heater right away when hers died within the first month of homeownership because of the warranty! Some years your costs will be lower, while other years some bigger ticket items might need immediate attention, so, the key is to be prepared.
- Never ignore routine maintenance because those little monthly or seasonal chores left undone could cost you dearly in future. Change out the filter on your furnace as needed, some must be done monthly, some quarterly, but, schedule it on your calendar and have extra filters on hand. Forgetting to shut off exterior faucets in the Fall, or, to disconnect the Sump Pump hose in late Fall early Winter, or reconnect the sump hose in Spring could result in some water leakage issues which are easily avoided. Use your home inspection as a maintenance tool and reminder of what tasks need completion throughout the year. Then, put them on your calendar and check them off each month.
- Rushing into a renovation before spending time in using a space is another common mistake Buyers make. Live in your home a bit and see how you really use it before you decide to move forward with your plans to remodel. You might change your ideas over time or decide other issues require more immediate attention. Don’t just look at the house as a showcase for all that brand new furniture you wanted to buy, or how you can make it look like something you saw on a home improvement show. You may ultimately decide to revise your plan because a new idea actually suits your needs better. If your plan included new landscaping, before you start, wait to see what comes up in the yard, in case you missed all the perennials because you bought in late Fall, or remove plants you didn’t know would come up in Spring. Take the time to get to know everything before spending that money.
- Annually Winterize your home, unless you live in a Southern state where you can avoid Winter altogether. Consider adding to attic insulation, caulking exterior windows or other areas around the exterior where warm air escapes, drain those hose connections, and putting a silicone seal around glass in windows will all help to save on Winter heating bills. Your trusted home inspector might have itemized a list for Winterizing which will make it your go-to list for Fall.
- If you purchased as a married couple or there are two of you owning together, don’t assume you are both on the same page with everything that might come up around the home. It can put a strain on the relationship when an issue arises and you are not in agreement on how to remedy a problem. Ensuring you have good communication throughout the process, especially before you buy, will help you work together to get things done in a way that works for you both, especially when it comes down to how you are spending money. Never make decisions without first discussing with your spouse or partner. Whether it’s paint color, home décor or bigger ticket items, which might mean taking on additional monthly expenses like replacing windows or something you pay off over time. You would not want someone to purchase a big-ticket item like a new car without consulting you first, so, having a conversation in advance about it will clear the air about how to proceed. You will find it more rewarding to accomplish your goals together.