Purchasing a new home is an exciting process. However, it is also sometimes stressful and can be difficult, especially when it comes to expenses. It is important to understand the real costs of home ownership when you are getting ready to buy. Often, there are expenses involved that you may not think to factor in, such as property tax payments. Here are some tips to help you account for such expenses and maintain your new home without breaking the bank.
Map Out Your Basic Expenses
Every home has a few similar basic expenses. Making a list of those expenses can help you determine how much money you need to set aside each month or year to care for your home. Many of those expenses are recurring and scheduled, such as your mortgage payments.
Here are some of the other top expenses you must remember to pay for as a new homeowner:
- Trash collection
Determine Your Large Immediate Expenses
Buying a home often comes with large initial expenses. For example, you may wish to immediately remodel a certain room. Alternatively, you may need to make a major structural repair before you can move in. Decide what your immediate priorities are, and budget accordingly. For example, if your home needs a new roof you can expect to pay an average of up to $11 per square foot, as of 2022.
Create a Regular Maintenance Fund
Nearly all homes need regular maintenance. It is only the types and costs of that maintenance that vary. For example, one property may have a very small lawn, but another may have a large yard requiring professional care. Your new home may require regular HVAC system maintenance, snow removal, or other predictable services. Budget for those services ahead so you are not surprised by them when the time comes.
Create an Emergency Fund
It is good practice to create an emergency fund before you buy a home, but you can also start one after you move in, if necessary. An emergency fund is vital because homes are complex structures with many different parts. Major unexpected repair needs are bound to pop up eventually. For example, plumbing could fail or you could need to replace a major appliance. Make sure your monthly budget includes the ability to set aside those emergency funds.
Pay Off High-Interest Debts
As a homeowner, your budget may start out tight. You can loosen it by eliminating high-interest debts as quickly as possible. Pay off or pay down debts like credit cards and auto loans to free up more money for home expenses or your emergency fund. If necessary, consider loan consolidation to reduce your monthly bills and interest payments.
Incorporate Life Expenses
The phrase “house poor” refers to spending most of the income on home-related expenses and not leaving enough for anything else. You may be able to avoid that problem by remembering from the start to incorporate your other life expenses into your budget.
You must have money in your budget to cover essentials like groceries and automobile-related costs. Clothing, toiletries, and other household items are also essential. You may also want to keep a portion of your funds free for entertainment. Once each of those expenses are budgeted properly, it becomes easier to comfortably maintain your new home and lifestyle.