Buying your first home is an amazing accomplishment. While purchasing a home can be gratifying, it requires a lot of time, energy and money. From hidden costs to maintenance demands, it’s important to know what to expect before you buy a home. Here are a few things no one tells you when you purchase your first home.
You Don’t Need to Spend Every Dime You Qualify For
When determining if you can afford the house of your dreams, start with deciding on the “mortgage amount.”
Before you set your heart on a home out of your price range, figure out what you can afford. Evaluate your budget, calculate your house payment, check out mortgage rates and assess terms to estimate the total amount your budget can handle.
Don’t spread your finances too thin by purchasing a house above your means. You need to leave room for your lifestyle and other unexpected expenses that may come up.
The Cost of Maintaining a Home Will Be More Than You Have Anticipated
When you purchase a home, you are now your own landlord. If anything happens to your property, it’s your responsibility to fix it. Often, new homeowners don’t factor in the extra costs associated with maintaining a home.
If you are moving from a small rental property, you may also be surprised with the increased costs to your utility bills. Increasing your square footage can increase heating and electric significantly.
Deborah Ribner, licensed real estate salesperson of Warburg Realty said, “The electric bill is always one bill that shocks people. If you are not diligent about turning off lights and turning down the heat or air, your bill could go through the roof.”
Your Furniture Budget May Exceed Your Expectations
Part of the excitement of buying a new home is filling your abode with new furnishings. You may think that you can simply take your furniture from your current apartment and place it around your new home. However, your new dimensions may not accommodate your older possessions.
Furnishing a home from scratch may cost as much as 25% of your home’s value. Most first-time home buyers may not have excess cash for decorating available. Therefore, it may be wise to use your older furniture for a little while. You can purchase new items slowly. It doesn’t have to be done all at once.
Shop Around and Purchase Good Home Insurance
Prior to closing on your home, you will need to secure homeowners insurance. It may seem confusing shopping for the right policy, but it could end up saving you money if something happens to your property. There are plenty of policies available, so it’s important to compare coverage, terms and conditions.
“You want to make sure that if anything happens to your home that you are covered,” Ribner said. “You never know what could happen and it’s worth it to pay a little more on homeowners insurance for the time when your little darling forgets that she has left the bath running upstairs and your bathtub ends up on your new couch in your downstairs living room!”
Budget for Hidden Expenses
If you plan to put less than 20% down on your home, your lender may require you to buy mortgage insurance. This may cost you about 0.5% – 1% of your home’s value.
Another cost many first-time home buyers forget is the continued maintenance expenses of the home. A good rule of thumb is to set aside 1% of the home’s value to take care of unexpected home repairs.
There are many extra expenses that come with owning a home. It’s important to set aside extra funds for these hidden expenses. You never know when you may need them.
Purchase in a Thriving Neighborhood
When you buy your first home you may want to evaluate the surrounding community. Purchasing a property in a thriving neighborhood will increase your resale value. Visit the local planning office to review what your neighborhood is anticipating for the future.
For example, a new shopping plaza in the community can increase traffic flow and noise. This could have a negative impact on your resale amount.
School Districts Really Do Matter
Even if you don’t have children, school districts can also impact your resale value. If you buy a home in a good school district the value of your home may increase over time. When it comes time to resell your home, families may be eager to make an offer on your home.
Your Monthly Payment Includes More Than Your Mortgage
Your monthly mortgage payment will include property taxes, utilities, homeowners insurance and any homeowners association fees.
Write down all of your monthly expenses to help you create a better estimate of your total payment.
The Bottom Line
The excitement of purchasing a home can overshadow some important details you need to take into consideration before signing on the dotted line. Before you purchase your dream home, make sure to do your research and properly budget for the additional expenses you will incur.
What is something you weren’t aware of before you bought your first home? What is the most important piece of advice you could give a new home buyer? Please leave your comments below.
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