You’ve sacrificed, scrimped and saved for the down payment on your first home. But have you saved for the whole new world of expenses that comes with home ownership? If not, you could get blindsided by:
Closing costs. Do your homework before making an offer because the down payment is just part of the cost of the purchase. There are assorted fees and assessments to be paid when your transaction closes. Talk to your real estate agent so you know what to expect. And don’t forget to consider ongoing monthly costs such as property taxes, insurance and homeowner association dues.
Utility set-up and monthly cost. Local utility companies often require a deposit and sometimes a connection fee to start your service. Usually this isn’t a budget buster, but definitely something you might not have anticipated. If you’re coming from an apartment, you also will likely use more electricity, gas and water in a place of your own. Water use, especially to maintain landscaping, is a big surprise to many. It helps to ask your seller for a summary of the home’s utility costs throughout the year to get a heads up on what to expect.
Repair costs. If you are buying an existing home, be sure to ask the seller to purchase a home warranty during negotiations. A policy will cost the seller about $500 but can save you a lot of headaches. Make sure the policy comes from a reputable company and take the time to read the fine print so you know what’s covered and what’s not.
Appliances. Do you have your own washer and dryer? Your own refrigerator? Unless your seller is willing to include those items in the purchase price of the home, be prepared to factor those costs in.
Furnishings. If you are coming from an apartment, you may be surprised how empty the house feels with only your existing furniture and belongings. The house might need window treatments, too. Resist the urge to go on a shopping spree. Take the time to make a budget, set aside the cash and make thoughtful purchases.
Lawn and landscape care. New homeowners will likely need lawn tools, a mower, trimmer, fertilizers and insecticides. Consider shopping at yard sales and thrift stores for these items. You may also be able to delay a few purchases by borrowing from family members and friends but eventually you’ll need to strike out on your own. Also, don’t forget to add in the cost of new or replacement trees, shrubs and bedding plants. All of this yard work takes time after work and on weekends. If you’re not willing to make the time investment, be prepared to pay someone to do it for you.