As a first-time home buyer, planning out your expenses is a great way to make sure your mortgage payment fits into your budget. There are new home expenses you know about already, such as your monthly mortgage payment, but you may forget to account for property taxes, homeowner's insurance, homeowner association dues, home maintenance and landscaping.
When you buy your first home there are many additional new costs that homeowners often forget to plan for, so we've outlined some of those for you below.
1. Home Repairs
It might not come up in the first few years if you build a new home, but it’s inevitable there will be things around your home that might need repairs. It could be a broken kitchen faucet, new HVAC system or damaged siding. Sometimes the home updates and repairs may not take a lot of time or money and sometimes they do. Some experts recommend at least 1% of your home's value should be allocated to yearly home repair and maintenance. So, if your home costs around $150,000, your yearly repair and maintenance budget should be at least $1,500. To be safe, we recommend budgeting between 1-3% of your home's value per year to home repairs.
2. Home Maintenance
Many first-time homeowners don't plan for initial or regular home maintenance costs. As you get settled in, there will likely be some initial maintenance you may want to do. Here are a few home maintenance items you might want to plan for in your expenses:
Initial landscaping costs like flowers, bushes, mulch and small trees.
Initial lawn costs like weed prevention and grass seed.
Lawn maintenance tool costs like purchasing a lawnmower, weed whacker, garden hose, sprinkler, etc.
Home exterior maintenance costs like re-caulking tools, siding paint, siding cleaning, driveway repair, cleaning gutters, etc.
Home interior maintenance costs like carpet cleaning, HVAC system cleanings and routine maintenance, air filters, etc.
This isn't an all-encompassing list, but it should help you start budgeting for home maintenance costs that come with achieving the dream of homeownership.
3. New Furniture and Décor
If you live in an apartment or rent a house smaller than the home you plan to buy, you may need to buy furniture pieces or décor to fill new rooms in your home. Sometimes apartments or rental properties also come furnished. When you transition to your new space, plan for some new furniture and décor.
4. Moving Costs
Whether you plan to use a moving truck to transport your stuff to your new home or you plan to move stuff in your own vehicle, you'll need to plan for any unexpected moving costs. Consider the build-up of many small costs like:
Renting a moving truck or trailer
Cleaning supplies as you clean your current apartment or rental property
Moving supplies like boxes, bubble wrapping and large furniture padding
Meals for after your food and ingredients are packed away
Gas expenses for the moving process
Hotel costs if you're moving long-distance
5. Property Taxes
When planning out your new home budget, you'll need to account for property taxes. Aside from your state property tax, you may also have to pay property tax to your county, city, special district or local school district. Check with your lender or look at the Closing Disclosure you received at closing to see if these taxes are escrowed by your lender and paid as part of your monthly mortgage payment. If taxes are not escrowed by your lender, then you will need to budget for that and pay them when they are due.
6. Homeowner's Insurance
Some first-time home buyers forget to plan for the cost of monthly insurance premiums. Homeowners insurance helps you protect your new home and belongings. Check with your lender or look at the Closing Disclosure you received at closing to see if your homeowners insurance is escrowed by your lender and paid as part of your monthly mortgage payment. If your lender does not escrow your homeowners insurance or if you own your home outright, then you will need to budget for the monthly insurance premium and pay it yourself. That way if you have an unexpected covered loss, you will have insurance to help.
If you're a first-time home buyer, proper budgeting can get you ready for homeownership. Check out our insurance products and let HomeFirst® Agency help you find the right homeowners insurance policy for you and your family as you transition into homeownership.