Congratulations on the purchase of your first home. Though the journey was likely one of ups and downs, you’ve finally found a place where you can start a new life. As one might imagine, it was no easy feat to pinch pennies and save every dime towards buying the home of your dreams, and you may be feeling relieved now that you’ve signed the closing documents and received your keys.
Though getting through closing is something worth celebrating, it should be remembered that becoming a property owner is a serious responsibility. One that will require the continual upkeep of your finances. During your first year in the home, you’ll find that failing to budget can result in an undue amount of stress and complications. Knowing what to expect and planning for them in advance, therefore, is the better option. Below are some budgeting tips to consider.
Costs of Settling In
If you’ve saved and budgeted up to the point of signing on the dotted line, you should be aware that effective financial management must go far beyond that. For instance, an immediate cost that should be considered are the expenses that surround your ability to get settled in.
Have you gotten a quote and budgeted for a moving truck or professional movers? If you live in a particularly wooded or country area where pests like ants, spiders, and roaches, may be prevalent, like in North Carolina, have you factored in the cost of pest control in Raleigh, North Carolina or neighboring cities?
There are also settling costs that might include purchasing things you didn't bring from your old house. Whether it be food and cleaning supplies or home decor and furniture, these are all expenses that need to be factored into your budget.
Property Taxes and Insurance
You may have added your mortgage payments to your budget, but two commonly overlooked, but related expenses are your property taxes and insurance. To obtain a mortgage, it is required that you also secure property insurance on your residence. This insurance policy provides a financial cushion in the event that there is damage to your property or belongings within. A policy can cost several thousand dollars per year depending on the appraisal value of your home.
Property taxes are a required expense mandated by your city and/or state. These taxes are commonly paid on a quarterly basis (or a monthly basis if included in your mortgage payments) and can cost $2,000 a year or more based on where you live.
Whether your home was newly built or you chose an existing property to live in, the need for maintenance will be ongoing and sometimes expensive. You’ll need to keep up with household systems including electrical, plumbing, heating and cooling. You will also need to maintain the roofing system, lawn, and the exterior of the home. While some maintenance jobs can be completed on your own, others will require you to rely on experts like electricians, plumbers, HVAC specialists, and home improvement contractors. Be sure to get a list of the best experts in the area and an idea of what their services cost so you can set aside money for it.
As time passes on, you’ll come to realize there are a lot of surprises that come with being a homeowner. Things tend to go wrong when you least expect them, and the costs can throw off your budget. A hike in energy rates, the need to replace roofing tiles, an issue with the septic tank, or anything relating to the home could go wrong without notice, requiring you to act fast. Having a rainy day or emergency fund can ensure that you’re ready to tackle some of those unexpected surprises as they occur.
Your first year in your new home will be one filled with fun, new memories, and a lot of lessons along the way. To reduce the amount of stress you’ll be under and to prepare you to sustain a decent living as a property owner, it is ideal to create a budget that includes the above-mentioned expenses. Through diligence and consistency, you’ll find it a lot easier to roll with the punches as they come.