Buying a new home is an exciting time and will have you brimming with anticipation while dreaming of all the wonderful things you can do once you have settled in. However, amongst all the excitement, many people forget there are hidden costs and when they pop-up, it has them wondering what they’ve gotten themselves into. Especially, if they weren’t prepared and didn’t quite know what to expect in the first year of home ownership. That’s why we have put together the most common hidden costs of home ownership and some budgeting tips that will help you maneuver through your first year like a seasoned pro.
Is there anything you can do to keep your home expenses down?
There are many different methods you can put into action to help keep your new home costs down, especially in the first year when your expenses will generally be higher than they would otherwise.
Homestead Exemption
The very first thing you are going to want to do is apply for a homestead exemption. This will help you save a significant amount of money on your property taxes every year going forward. There are some stipulations that apply so you will have to research the requirements for your particular state to learn what is and isn’t required and to take advantage of this opportunity to its fullest.
Conserve, Conserve, Conserve
Another great way to save money is to conserve. And that means in every area of your life. Take shorter showers, turn off the water while doing your dishes and brushing your teeth, don’t flush after each use, try flushing every third or fourth time, if the bowl water is not dirty. You can also use shorter laundry and dish washing cycles, etc. Turn off the lights every time you leave a room and don’t leave your televisions on if you’re not watching them. Unplug your electronics if you are not using them as they still consume electricity even when they are off. You can also start making your coffee and eating breakfast at home rather than hitting the drive-thru.
This method can also be used with the products you use every day and not just your utilities. Try using a little less soap, toothpaste, conditioner, mouthwash and use every last drop out of every product you buy. Now we are not saying don’t use what you need, but people have a tendency, without really thinking about it, to use more than what they really need and are unconsciously wasteful. That means use that bar of soap until it’s completely gone and the same goes for using the toilet paper roll all the way to the end and not throwing it away when it starts getting a little low. And why not squeeze that toothpaste tube until absolutely nothing else will come out. You would be surprised at just how much you could save if you and your entire family were more conscientious about what you waste.
Home Warranty
If you were offered a home warranty either by the seller or as you were buying your new home, take it and use it. When buying a home, especially within the first year, there are usually things that will go wrong, but if you have a home warranty, those unexpected repairs and issues are generally covered. Once you have lived in your home for a while, you will learn about its little intricacies and will probably have determined if there are any major defects that need to be addressed. After the first year, you can decide whether or not you want to continue paying for your home warranty. But having that home warranty on a house you just bought will be a life saver, if anything major goes wrong. Even several little repairs can really add up if you don’t have a home warranty to cover the expense.
What are the most common expenses in homeownership?
Many new homeowners aren’t aware of some of the hidden expenses that can creep up when owning a home. Probably the most common is the fact that your property taxes will probably go up each year as the value of the home increases. And if you purchased a brand new home, the value can skyrocket significantly in the first several years creating a tax burden you may or may not be prepared for. Another expense that isn’t always considered is the homeowners insurance cost. In many areas, these go up each year as well. And while on the topic of insurance, you need to inquire as to whether or not your home is in a flood zone or other high risk location because there are many factors that could cause your homeowners insurance to be much higher than you anticipated. This will also cause your monthly mortgage payments to increase as well, if your homeowners insurance is collected by your mortgage company and your mortgage company will require you to maintain full coverage insurance until your loan has been paid in full. You should also be aware that the insurance requirements could change from year to year, depending on the weather events that occurred in the previous years. Here’s an example of what some homeowners experienced after Superstorm Sandy.
Other Hidden Costs of Homeownership
Irrigation System – If you have an irrigation system and you use it regularly, you can expect your water bill to increase and if you live in an area where water is at a premium, this could cost you.
Unexpected Repairs – Unexpected repairs are another area that catches many homeowners off-guard. You should pay into an emergency fund every month just as if you were paying a bill to help cover any unexpected repairs, because they can and do happen more often than not.
Miscellaneous Surprises – Rising utility rates, street light expenses, a storm drain expense and other similar rate hikes could also occur, usually once a year. And in some places, if your street asphalt needs to be replaced, guess who has to pay for it? Yep, every homeowner who lives on that street will be forced to share that expense. Another unexpected surprise you could receive is if your insurance company tells you that you have to replace your roof or they won’t insure you. Talk about a major hit to your budget!
Settling In – Other expenses many people don’t think about, but add up quickly are: light bulbs, new locks, window coverings, garage door opener remotes, batteries, smoke and carbon monoxide detectors, fire extinguishers, miscellaneous furniture, area rugs, door mats, patio furniture, storage locks, lawn mower, weed trimmer, gas can, fertilizer and weed killer for the lawn and we could go on and on, but you probably get the picture.
The Bottom Line
Any one of these things could cause you to lose your home, if you’re not prepared. It’s your responsibility to become an educated homeowner so you can anticipate and prepare for unexpected events. If you don’t, you could find that you are in over your head and could quite possibly lose your home. Homeownership is an absolutely glorious experience and one that you won’t want to trade for anything in the world, but you need to be smart about it. So take these budgeting tips we’ve provided you and use them to your advantage.
