If you’re on the hunt for a home, you’re likely well aware of listing prices, down payments, and maybe even closing costs.
But as expensive as those all are, they’re not the end of your homeownership costs. In fact, they’re really just the beginning.
As a homeowner, you’re beholden to dozens of expenses — both expected and not — and properly preparing (and saving) for those costs is crucial.
Are you thinking of buying a home in the near future? Here are some of the more unexpected costs of homeownership you’ll want to keep on your radar:
- The move. Moving isn’t cheap. Not only do you need packing supplies, a moving van, and movers, but there are gas and travel expenses to cover, too. If you’ve got a lot of stuff or are doing renovations at your home before move-in, you might also need to pay for a storage unit for some amount of time — yet another cost to budget for.
- New decor & furniture. If you’re moving from an apartment or small rental to a larger home, then you’re going to have some space to fill. That means buying new beds, couches, TVs, furniture, and decor — all of which cost cash. If possible, it’s usually best to buy these items in stages to save on funds. Start with the must-haves (beds, kitchen tables, etc.) and move on to the more decorative stuff later on.
- Utilities. Homes come with a variety of utility bills — water, gas, electric, cable, internet, garbage, recycling, and more. These costs vary by provider and size of the home, too. Make sure you’re well aware of what utilities a home will require before making an offer.
- Lawn care. If your home has a yard, you’ll need to cover the costs of caring and maintaining that yard, too. That could include hiring a landscaping or lawn care crew, or it may just mean paying for the weed eater, lawn mower, gas, and electricity required to do it yourself.
- Regular maintenance. Your actual home will require maintenance, too. Air filters will need changing, light bulbs will need replacing and you’ll need supplies to clean, dust and keep the home healthy, too. All this takes a steady flow of cash to cover the costs.
- Property taxes. You know you’ll have to pay property taxes at some point, but do you know how much those will be and when? Property tax rates should play a big role in your house hunt. High tax rates typically mean a higher monthly payment, so make sure you’re aware of tax rates on any home you’re considering. You don’t want sticker-shock after the fact (or be caught without enough money to cover your tax bill!)
- HOAs. Homeowners’ associations can cost anywhere from a few hundred to a few thousand dollars a year. Come prepared, and don’t let HOA costs surprise you!
- Insurance. Home insurance costs vary by coverage, location, and property, so getting accurate quotes ahead of time is key. You also might have to get flood, wind, or other specialized insurance depending on where you’re home is located.
Finally, as they say, “expect the unexpected.” As a homeowner, there are always unexpected repairs and fixes to be made — broken dishwashers, blown over fences, and plumbing leaks. You can’t predict when these issues will crop up (or even what they will be), but rest assured: every homeowner has at least some repairs every year.
Preparing for the Costs of Homeownership
So, how do you prepare for all these unexpected costs? That’s a three-step process:
First, do your research on the neighborhood. Know what property tax rates are in the area, and research utility providers, rates, and other information for the neighborhood. Is there an HOA? How often do you pay dues?
Then, make sure you know the home. Make sure you fully understand what utilities your home will require and how much those will cost. Do you have to pay extra for garbage and recycling pick-up? Will you have a separate gas bill or is the home all electric? Is the home equipped with double-paned windows, tinting, or green features that could cut down on utility bills? You should also look to see if the house is on a floodplain. If so, you may be required to get flood insurance on the property — yet another annual cost.
Finally, save up a rainy day fund. Having cash to cover your down payment and closing costs is only the beginning. Before you become a homeowner, you also want to have a little stowed away for a rainy day — extra money to cover sudden repairs, maintenance issues, or even emergencies. You ideally want at least a few months’ worth of mortgage payments saved up just in case.
Want to learn more about what buying a home might cost you? Contact your local Embrace loan officer today. They’ll help you estimate your costs and determine an accurate home buying budget for your goals.