Posted on: July 31, 2018
Nothing you’ve done up to this point compares to owning a home. Buying a home is often the biggest purchase someone has made in their life, and it’s a big milestone – and financial commitment.
As exciting as moving into your own home is, you shouldn’t get swept up too quickly. Things are going to need attention and you’re going to need to budget for future expenses.
To avoid making your big purchase feel like a big mistake, here are some tips that responsible new homeowners should follow. With a little prep and planning, you can make your purchase a happy, positive experience.
Before moving into a home, the buyer was most likely renting. Mortgage payments aren’t too far from rent payments, so you’ll be ready for that. But there are other costs to be aware of.
Property taxes are not only going to be there the entire time you own your house, but they’re likely going to increase as the value of your home rises. While you don’t need to keep a long-term plan to keep up with rising taxes, you should be prepared to budget for them annually – and expect to pay more each year.
Utilities are also a huge expense, especially for homeowners that aren’t prepared. Heating and cooling can account for nearly half of your total energy costs, so you should track your usage and invest in a smart system that reduces costs while keeping you comfortable.
On top of these, other expenses you should prepare for include:
Add all these up and you’ll likely be paying a bit more than you were with your rental. On the plus side, you’re now paying for a property that you own.
If something is neglected for too long, permanent damage could be caused. This means spending money to fix or replace it.
Keeping your home clean is important, from the carpets to the window screen to the gutters. You should also be checking on your roof, water heaters, furnace and other major appliances. Air conditioning filters will need to be replaced regularly, and lightbulbs are bound to go out eventually.
While spending money on something that isn’t broken can be frustrating, it’s better than waiting until the last minute. If that happens, you may end up spending much more than you could have if you acted earlier.
Your home is probably going to be a bit bigger than your apartment, which is good. But you probably only have enough furniture to fit your old rental, so you might have to get some more furniture.
Furniture can be expensive, especially when new. Check out consignment stores to find good deals, and ask friends and family if they have old furniture they’re no longer using.
Appliances can also be pricey. If you haven’t bought the home yet, see if you can convince the seller to leave the appliances behind. These are called seller concessions, and they’re negotiated in the contract.
While homeowners insurance might seem like a waste of money, ignoring it could be the worst mistake a homeowner makes. You’ll probably be required to get homeowners insurance when you get a mortgage, but some homeowners drop it after so many years.
Remember, this is the biggest purchase you’ve ever made. You’ll want to keep it protected, even if it means spending a little extra each month.
Here’s a good part about owning a home: you can deduct a lot of expenses and end up getting a bigger tax return.
You should hire a professional accountant the first year you own a home, even if you do your own taxes. They’ll be able to help save you money, and you’ll be able to see how. There are too many intricacies to taxes and homeownership to go through, so you’re best off spending money on an accountant in year one and using your newfound knowledge in the future.
The unfortunate reality of life is that things will go wrong at some point. You can avoid making these bad things worse by keeping an emergency fund.
There’s no perfect amount to keep aside, but many financial planners advise that you put aside 3-6 months’ worth of expenses. If you can save more, it’s never a bad idea.