Budgeting For a House
If you’re preparing to buy your first home, you undoubtedly already know something about the costs associated with your purchase. A down payment, closing costs, monthly mortgage payments...these are all typical expenses that first-time home buyers think about when they are budgeting for initial and ongoing expenses. But these are only some of the costs you may face.
Overlooking some of the less obvious expenses — and being caught unprepared — can undermine the carefully laid plans of new homeowners and even threaten their financial stability. It’s definitely best to avoid surprises.
The Hidden Costs of Buying a Home
Every homeowner’s situation is a little different, and the expenses each faces will depend on the type of home they’re purchasing, the condition of the home, its location and their previous living situation. But hardly anyone can avoid all of these non-mortgage house expenses:
- Movers. Unless new home buyers have been living at home with their parents until now, or are true minimalists at heart, their savings plan should include funds for moving. According to industry statistics, the average cost for an interstate move is now $4,100, while the average cost for an in-state move is $980, and that includes moves with and without professional help. These costs will vary with location, time of year, and moving distance.
- Furniture. Moving from a smaller apartment or home into a larger home usually means buying more furniture. It’s not necessary for new homeowners to purchase every piece of furniture they need at once, but they should have a plan. It’s not much fun to have a guest bedroom without a bed or a dining room without a dining table.
- HOA Fees. For most condominiums and some single-family homes in certain neighborhoods, homeowners association fees are monthly dues charged for amenities and common property maintenance and repairs. For most properties, these dues range between $100 and $700 per month, based on the services and amenities provided.
- Maintenance and Repairs. All homes need to be maintained regularly, whether that means mowing the lawn, spraying for pests, clearing gutters, cleaning air vents, painting, or other activities. Homeowners should budget 1-4% of their home’s value for maintenance. Repair costs are less predictable but can have significant financial impact. A $5,000 or $10,000 surprise is never welcome. All home buyers, even those purchasing a new home, should have a fund set aside for repairs.
- Landscaping. Homeowners who own outdoor space will want to enjoy it. Even when improvements aren’t necessary, keeping existing landscaping maintained will be a line item in the monthly budget, whether it needs to cover professional help or just supplies and equipment.
- Home Improvements. Some home improvements may be necessary for livability, like an extra bathroom to accommodate the children. Others may be lifestyle enhancements, like a fireplace or pool, that aren’t needed immediately. In either case, getting them done first requires getting them into the budget.
- Property Taxes and Homeowners Insurance. These are sometimes paid directly on an annual or other periodic basis and sometimes rolled into the monthly mortgage payment by the lender. In either case, it’s important for new homeowners to research how much these will cost and factor them into their overall housing budget.
Understanding the full range of house expenses can not only help potential home buyers set savings and spending budgets, it can also help them determine how much they truly need in a home loan. In some cases, it may be advisable to pay some expenses — such as moving, necessary home improvements, repairs and furniture — out of funds saved up for the downpayment and borrow a little more. A loan calculator can help borrowers price out their loan needs based on their total costs.
Maintain Your Financial Footing with Bethpage
Don’t let unexpected house expenses undermine your financial stability or disrupt your financial plan. Bethpage mortgage professionals are always available to help you plan and budget effectively.
When you’re confident in your budget and ready to shop for your new home, get off to a great start by learning how to get pre-qualified for a mortgage or starting your mortgage application with Bethpage.