When we bought our first home, we were living paycheck to paycheck. I still remember adding up the cost of all the food in our grocery cart before we got to the checkout line to make sure we had enough to cover it. We saved and we saved but it never felt like it was enough to buy a house. It’s daunting, isn’t it? Here’s the thing. When you rent, you’re paying someone else’s mortgage. If you can cut costs and take advantage of all of the first-time homebuyer incentives, you can make your dream a reality. But we don’t want you to go into this blind. Budgeting for home ownership is much more than making sure you can afford the mortgage each month. Here are some costs that come along with that white picket fence that you may not be thinking about:
Real Estate Taxes: Both school and county taxes may be figured into your monthly mortgage payment but keep in mind, your taxes could increase each year. While there are exemptions you can look into, they are nominal. So if this number is already way out of your league, consider shopping in a less-expensive district.
Bills, Bills, Bills: I know, you had bills when you were renting, sure. But expect them to increase dramatically. You are now heating, cooling, and responsible for an entire home. Depending on where you buy, things like water, sewer, garbage, HOA fees and the like could really add up. Be sure to ask the listing agent for monthly estimates on the gas and electric bill so you can have a better idea of what you’re getting into.
Maintenance: This is a doozy. Roof, windows, hot water tank, furnace, a/c unit, washer and dryer, kitchen appliances…these are all big ticket items you now need to plan for. You’ve asked for the age of the appliance and have an idea when you might need to replace it. But what about things like purchasing furnace filters, patching a leaky spot on the roof and oh shoot, the roofer says the plywood underneath needs replacing too. This all comes under the homeowner umbrella of responsibility and sometimes when it rains, it pours. #NixonPack Tip: Ask your Realtor to write a Home Warranty in the purchase contract. These run roughly $500 and are well worth it, even just for peace of mind. The warranty will likely cover all of the major mechanicals and will help give you some breathing room for 1-2 years after you close.
Extras: Now we’ve gotten to the meat and potatoes of why I wrote this post in the first place. Speaking of meat and potatoes, my Grandmother called me from Florida the other day. After 60 years of living on a homestead, she decided to fly the coop and she and Grandpa became snowbirds in Florida. They bought their very first place in their eighties and I couldn’t be more proud of them. But Gram couldn’t get over how all the extras added up. When you’re budgeting for your first home or your next house, don’t forget to plan for window treatments, area rugs, throw pillows, paint, closet organizers, hardware, mirrors and wall hangings, landscaping, furniture, the list goes on. If you’re coming from a rental – do you have a snowblower, a lawnmower, a shovel, a drill? These are necessities. And notice I didn’t even include any major changes like a bathroom reno or DIY project in the living room that you know you’ve already started pinning. Even after six homes, we still get blindsided by the unexpected. The blinds in our last house cost $6,000 because of the odd size and shape of the windows. I went to TJ Maxx and bought curtains (which turned out to be shower curtains) that I stapled to the wall for months while I came to terms with that number.
Sigh. Don’t be feeling all Debbie Downer. This is oh so worth it as you’ll soon find out. But the better you start planning now, the happier a homeowner you shall be. Do you have a budgeting question? Ask the Pack below!