I think that most people are familiar with the idea of a down payment when buying a home. However, there are other costs associated with the first year of home ownership that are not always common knowledge, so I wanted to share a few today.
TAXES. The only sure things in life are death and taxes. And you WILL pay taxes on your home. Property taxes are paid once a year, but if you have a mortgage, part of your payment will be set aside to pay for your homeowner’s taxes.
HOMEOWNER’S INSURANCE. Like your property taxes, your insurance is paid once a year and, like taxes, if you have a mortgage, part of that payment is also set aside to pay for your yearly insurance fee.
If you don’t have a mortgage or if your mortgage for some reason doesn’t have an attached escrow account (escrow is the name for the account that holds your property tax and homeowner’s insurance money), then you’ll need to save for those annual fees yourself.
Moving into a new home is usually an upgrade, which means you might want new furniture, which is great! Just make sure to NOT buy any furniture on credit before you close on your home, as it might change your debt-to-income ratio enough to disqualify you for your home loan.
PAINT! Many people choose to repaint their home in their first year of ownership. Should you decide to repaint, the paint/supplies typically cost around $500.
Another first year cost could be a home warranty. A home warranty is a one time payment that covers major household items, such as your water heater, if it breaks during your first year. (I always request a home warranty paid for by the sellers when representing a buyer!) After the first year has passed, you have the option of paying the fee again to cover your major appliances for the following year.
If you’ve been thinking about making the change to a new home this year and want to know what you might need to save up for, feel free to contact me and I can help you see what you’ll need to do to be prepared!