Are you considering purchasing your home? If so, congratulations! Owning a home is a major milestone for most people and may be a person’s largest purchase and investment. Ideally, you’ve already read How to Financially Prepare for Homeownership, Saving for your First Home, and The Home Buyer’s Checklist.
Now it’s time to prepare for the costs that come with owning a home!
When it comes time to purchasing your home, there are a few costs outside of the down payment and closing fees that may come up. I want you to be as prepared as possible for your new home, so I’m sharing 6 unexpected costs that come with owning a home.
If you are prepared for these costs ahead of time, you will be in a much better position, come the closing.
6 Unexpected Costs that Come with Owning a Home
You’ve signed on the dotted line, and now it’s time to move into your new home! You may think your current furniture will suffice (and maybe it will, partially), but I guarantee you there will be additional items you will need to furnish your home.
Do you need additional bedroom sets? Do you need a desk for the office? What about the entertainment room?
You can certainly take a trip to IKEA to stock up on budget-friendly, DIY furniture, but since this will be your home, it may be worth investing in quality pieces.
Buying all of your furniture at once may not be the best option, financially, but having a game plan for furniture purchase before you move in will make you feel better.
#2 Lawn Care
If you’ve never owned a home before, then you likely didn’t have to worry about taking care of the lawn. Usually the landlord would cover that expense. Well, you’re the landlord now! Your lawn care may be covered in the monthly HOA fee. However, you should double check.
Some HOA fees only cover the lawn care for the front yard, meaning you’ll have to take care of the backyard on your own dime.
If you don’t want to hire a service to handle your lawn care, you can always invest in a handy-dandy lawnmower. This will definitely be the cheaper alternative, although not the most time-saving option.
Think about how the lawn will be covered before you move in, so you don’t have to scramble to make sure your grass looks great.
#3 Water Heater
The good ‘ol water heater! This is what keeps your water hot when you shower. The minute the water heater goes out, so does the hot water.
As a tenant, you don’t have to worry about fixing the water heater. When you own your home, you do have to make sure your water heater is up to par. This can be very expensive.
The hot water may be working when you move in, but water heaters aren’t designed to function properly after 10+ years. If you are purchasing a brand-new home, try to get any warranty information, just in case something breaks.
If you are purchasing a home from previous owners, ask when the water heater was purchased and serviced last. Make sure you have a savings in place for appliance maintenance, ideally before you move in.
#4 Property Fines
Will your future home be in a neighborhood that requires an HOA? If so, make sure you are familiar with the rules of the community. Failing to move your trash can out of sight, running a business out of your home, and untidy lawns can result in fees and fines being assessed from the Homeowner’s Association.
Avoid any unnecessary fees by familiarizing yourself with the maintenance rules of the community. Sometimes you will get a warning before a fee is assessed, but let’s not test that theory!
#5 Pest Control
Sure, ants, bees, and June bugs may not bother you, but termites can ruin your home. To avoid any unwanted insects living on or around your property, you will need to ensure you factor in pest control into your recurring home maintenance budget.
Some HOA fees will cover pest control, but if they don’t, this is something you will need to protect your home.
You can do things on your own to help manage the number of pests around your property, but having a professional come spray, at least quarterly, is never a bad idea. This doesn’t have to cost a fortune, and it can save you a lot of money down the line.
#6 Escrow Increases
If you have financed your home, then you will likely have an escrow account. The escrow account is designed to cover the costs of your taxes and homeowner’s insurance.
It is an extra amount added to your monthly principal and interest payment. As the property values in your neighborhood go up, the taxes will likely go up. This can result in an unexpected (and unwanted) escrow increase.
When the escrow increases, you are usually given two options from your lender: 1) pay the additional amount in one lump sum or 2) have the lump sum divided over the year and added to your monthly payments. Either option works.
On the other hand, if you overpay in your escrow account month over month (which is more common than you think), it can result in your monthly payment going down. This is a pleasant surprise but shouldn’t be counted on.
Owning a home definitely isn’t cheap, but it is an investment. Being savvy about the costs (unexpected or not), that come with owning a home can help you stay on top of your budget, and make sure you have funds available when you need them.
Do you currently own a home? What unexpected costs came up that caught you off guard? Share your experiences and tips in the comments section below!