4 Minute Read
So you’ve reviewed your budget, crunched the numbers, and researched your options. Now you’re ready to take the plunge into homeownership.
But are you really ready?
Most people don’t realize that there are “hidden” costs to owning a home. What’s even worse is that many people don’t budget, and therefore aren’t financially prepared for these forgotten costs. When making a large purchase, it’s always a smart idea to include some wiggle room in your budget and beef up your savings for unexpected expenses.
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Here are five ways that homeownership can end up costing you more than you anticipated.
1. Repair fees
Yep, you’re now in charge of all maintenance costs. Everything from a leaking hot water heater to a broken AC unit, it’s now your responsibility. It always seems that when one thing goes bad, so does something else…and something else…and it just snowballs from there. That’s why it’s imperative to have completed Baby Step 3 and have a big emergency fund socked away—and not use it for closing costs or new furniture. These expenses can show up when you least expect them, so be prepared!
2. Lawn care
You’ll quickly realize that the grass doesn’t cut itself. And that means you have to buy a lawnmower—at the very least—or pay someone often so your lawn doesn’t transform into a prairie where wild animals roam. Want to do some landscaping? That’s going to take a chunk of change, too.
You think you finally have it all figured out budget-wise with your new home. Then zing! The mail brings a note saying that taxes are due soon. And the tax amount will make your jaw drop! It’s one of those hidden costs that can easily be overlooked because it only comes around once a year. Dave recommends factoring in these yearly costs when you are in the market for a house—make sure the payment (including taxes) is no more than 25% of your take-home pay.
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No one realizes just how much time it takes to keep up a home. Your weekends turn into a spring cleaning extravaganza or an all-day event of installing the new dishwasher. Homeownership takes work. You have to keep it tidy. Maintain it during the seasons. Cut the grass, clean the bathrooms, paint the trim, the list goes on and on. As the old adage goes, time is money.
5. New stuff
Suddenly your old couch doesn’t look so great in your new living room. And your bedroom furniture just doesn’t go with the style of the house, so you must buy new furniture, right? If you aren’t careful, you can quickly drop several thousand by decorating your new home to look like “you.” Contrary to popular belief, this stuff can wait. There’s no reason to wipe out your savings or accrue debt just to make your house look “perfect.” If you want to upgrade your furniture and such, do it! Just take it slow, save a little every month, and pay for it when you have the cash.
And that’s just the start of the list! The best ways to alleviate the blow of these unexpected expenses is to be proactive by preparing a budget, having three to six months of household expenses saved, and actually sticking to the budget.
There's also no way to overstate the importance of working with a real estate professional in today's housing market. Dave's Endorsed Local Providers (ELPs) have been through good markets and tough ones and will give you the same advice Dave would about buying or selling a home. Contact your ELP today!