Preparing to become a new homeowner? Congratulations! Buying a home is a big deal, and you’ve no doubt been saving, preparing and planning for quite some time.
But there’s more to buying a house than just the cost of your new home. To make sure you don’t go over your budget or make a financial mis-step during the process, here’s a list of seven lesser-known expenses that all budding homeowners should keep in mind.
1. Property Taxes
All homeowners pay taxes on their property, which are determined by the city or municipality in which you reside. Your exact monthly or quarterly payment will depend on a few factors – including the value of your home, the value of surrounding properties, and what kind of tax regulations are put in place by your local government. Tax payments are sometimes included in your overall mortgage payment, so be sure to speak with your lender if you’re interested in using this option to help you budget for taxes.
2. Home or Condo Association Fees
Many neighborhoods belong to a homeowners association, which you automatically join when you buy a home in that area. The good news is, being part of a homeowners association gets you access to shared benefits and services such as landscaping, security and garbage collection. However, you will be required to chip in with monthly or quarterly fees. Prepare to add around $200 or more every month if your property is part of an association, annual fees may fluctuate but you can ask for recent fees to help you plan.
Insurance is critical to protect yourself and your assets as a new homeowner. After all, you’ve just spent a good chunk of change on a beautiful new home – the last thing you want is to leave it unprotected. Homeowners insurance will help to safeguard your home and belonging, plus cover your own liability in case an accident occurs to someone else on your property. While homeowners insurance is often folded into your monthly mortgage payments, do also consider if you want to pay more for additional insurance, such as flood or earthquake insurance, depending on where you live.
4. Lawn & Garden
One of the most surprising costs for many new homeowners is the cost of upkeep for a land or garden. Depending on how much space you have, maintaining it can take a whole lot of time – from mowing, to weeding, to keeping trees trimmed. Performing these tasks isn’t just a way to make your property look nice; depending on the rules in your municipality, it might be a legal obligation that you keep your landscape managed. The key for budgeting is to think ahead. Consider what tasks need to be done and how often, what tools you’ll need, and if it makes financial sense to hire someone to help.
Don’t fall into the trap of assuming that your utility costs as a homeowner will be the same as they were when you were a renter. You’ve likely upped your square footage, meaning the cost of heat, gas and air conditioning will probably rise. Your utility cost can also be affected by other aspects of your home; for example, are the windows double-glazed? Is the space well-insulated? If you’re facing high utility costs, it could eventually be worth it to investigate home upgrades as a way to lower your monthly bills. MassSaves offers free Home Energy Assessments to help you improve your home’s efficiency and reduce your monthly bills. (link to MassSaves https://huecu.org/other-loans/mass-save-heat-loan/)
Yup – these little critters can have a big impact on your budget, so plan accordingly! Termites are one of the most common household pests, infamous for their ability to cause widespread – and pricey – damage to the structure of your home. Ants, cockroaches and rodents are just a few of the other unwanted houseguests you may find yourself struggling to control, so prepare ahead of time and keep some savings set aside in case you need to call the exterminator.
7. Emergency Fund
As a homeowner, it’s imperative that you have a robust emergency fund set aside for home maintenance and repairs. Aim to save around 1 to 2 percent of the value of your home per year, which you can keep in a high-yield savings account so that it’s generating a bit of interest, but quickly available if you need to access it. Resist the urge to dip into these savings for run-of-the-mill expenses, and instead use this fund to keep up home essentials like roof maintenance, flood-proofing, or major structural updates.