Homeownership may start with a down-payment and a mortgage, but that is just the first part of the process. During their investigations into mortgage financing, interest rates and monthly house payment, to get an idea of monthly budget, many first-time homeowners forget about all the additional costs associated with owning a home.
Apart from potential Homeowners Association (HOA) fees and the utility costs (Buyers might find cooling or heating a house is much more costly than an apartment!), and, general upkeep, which typically can amount 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. Hopefully, you have gotten a thorough home inspection and have a report as reference as well as the inspector, aside from your realtor, to request trusted contractor names in case a repair is needed.
Making sure you don’t put more down than necessary on your down payment, and shorting your cash reserves needed after you close, is key when making your offer, because even new homes will need some additional cash expenditures. Every new home will not come with blinds, shades, draperies, and, even if you have all the furniture, old items may not ultimately work with the configuration of the space you now own. There will always be unexpected expenditures.
Several things to keep in mind as you move toward home ownership 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, your repair costs could skyrocket. You could spend $135.00 an hour, or more, on a specialist, so 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. Try to do some basic research before calling an expert to get an understanding of what is wrong, this will help you explain the issue over the phone. That can help avoid confusion about what needs to be done and how long repairs might take to fix. It can also help you nail down the right person for the job at hand.
- Get a referral from a trusted source, such as your realtor or home inspector for which contractor to use, you want a high recommendation and multiple reviews if possible before hiring someone. 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 just dive into the Yellow Pages or go online.
- As mentioned earlier, home maintenance can cost an average of 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, is a wise decision. Some people opt to purchase a Home Warranty annually to offset the cost of some of the repairs. One of my clients was able to get a new water heater right away when hers died within the first month of homeownership! Some years will be fixing smaller items and other years you may really need to do some remodeling, so, being prepared in advance is key!
- Don’t ignore routine maintenance, typical things you should do monthly or seasonally should not be left undone or this can cost you dearly in future. Change the filter on your furnace as required, some must be done monthly, some quarterly, but, be prepared and have extra on hand. Don’t neglect to shut off exterior faucets in the Fall, or, disconnect the Sump Pump hose to ensure ice isn’t damming in the hose during Winter. Don’t forget to reconnect the Sump Pump hose in Spring again. Your home inspection is also a good tool and reminder of what tasks need attention at different times throughout the year, so, put them on your calendar and try to do something each month.
- Rushing into remodeling is another common mistake Buyers make before really living in the home awhile and assessing their future needs. Get accustomed to the living space first and then decide if you really still want to convert the use of one of your rooms. Your ideas might change with time, and, you might decide other issues require more attention first so you can wait on what you thought you needed. Don’t just look at the house as a showcase for all that fancy furniture you planned on buying, or assess a home’s potential based on how you can make it look. You may ultimately decide to revise your plan because your anticipated use of an area or room turned out to be something that actually suits your needs better. Or, if you were planning on new landscaping, be sure to wait to see what comes up in the yard, in case you missed all the perennials because you bought in late Fall, or other surprise plants you didn’t know would come up in Spring. Take a beat before spending that money.
- Always Winterize your home, unless you live in a Southern state where you can count on not feeling the Winter breezes. You might need to add attic insulation, caulk exterior windows or other areas around the exterior where warm air could escape, drain hose connections, and even recaulking around glass in windows will all help to save on Winter heating bills. Your home inspector might suggest other ideas that could help with this, and, doing it before Winter sets in is going to make you rest easier when it arrives.
- If there are two of you owning together, don’t make the assumption you are both on the same page with everything needed for the home. This can put a strain on the relationship when an issue arises and you find you can’t agree how to remedy a problem. Keeping good communication throughout the process, especially at the beginning, will help you work together to ensure things get done in way that works for you both, especially when it comes to spending money. Never make decisions without first discussing with your partner. Whether it’s paint color, home décor or bigger ticket items such as renovation, which might mean taking on additional monthly expenses. You would not want someone to purchase a big-ticket item without consulting you first, so, having a conversation about everything will clear the air about how to go about the process. It will be more rewarding to accomplish your goals when you work together on it.