BIO: Dominique Brown is a financial planner, landord, personal finance blogger and video blogger. He is the owner of YourFinancesSimplified.com where he talks about everything from being a new father to his worst financial mistakes. He is also the owner of InsiderRealEstateTips.com where he talks about real estate exclusively. You can find him either on Twitter, Facebook, Youtube or Instagram.
Buying a home is an exciting time in your life, and it is a busy one as well. From getting every one of your worldly possessions moved in to signing mounds of paperwork, there is always something to be done. In this whirlwind of activity a few important things can slip through the cracks. This is unfortunate, since these things can cost thousands of dollars without even being considered a high priority.
Listed below are some of the six most expensive things every new homeowner should prepare for, and if you don't, you might find yourself in a difficult situation.
1. Property Taxes
When moving into a newly constructed home, the property tax can suddenly skyrocket in the first year or two into the range of thousands of dollars. The last time the property was evaluated it was most likely an empty lot, which means that the property taxes were much lower. Now that a house has been constructed on that lot, its value and its property taxes have increased.
The initial property tax payment can sometimes triple in the small span of a year. Property taxes are also affected by state and even by county.
2. Window Coverings and Treatments
Windows are usually a big selling point for a house. The bigger the windows, and the more light that comes in, the better. However, those big windows will need things such as curtains, screens, blinds, and shades. The windows of old homes especially will usually need to be treated to make sure there are no gaps where hot and cold air can leak out.
The price for all of this can easily reach upwards of a couple thousand dollars. To minimize costs, you may want to purchase materials and simply do the job yourself. In some cases, the previous owners will leave things like blinds, and you will want to see what the homeowners are doing in your specific situation so that you can add the window treatments into your contract if possible.
3. Insurance
Every homeowner requires homeowner's insurance. The cost can vary greatly depending on your state, the size and value of the house, and size of the lot. Insurance can cost anywhere between seven hundred to two thousand dollars annually. However, basic insurance may not cover every sort of disaster. If your home is damaged by an earthquake, flood, hurricane, or landslide, you may be stuck holding the bill for the repairs. Then there's the matter of insuring your belongings. When all is said and done, you may be paying more than you expected.
4. Landscaping and Groundskeeping
That front lawn may be beautiful and immaculate when you first buy that house, but it didn't get that way overnight. Worse yet, it won't stay that way for long if neglected. Even if the front lawn is amazing, chances are that the backyard isn't as well kept. After all, most owners focus on curb appeal. Depending on the lawn, you may be spending up to thirty thousand dollars on irrigation, sprinklers, and landscaping materials. Even more if you wish to build a patio or deck. When faced with a barren or unkempt backyard, always try to use it as leverage to negotiate a lower price with the seller. Otherwise, you may be spending most of your time and money outdoors.
5. Utilities
Utilities are perhaps the most variable cost of a home. Things such as the size of the house, the companies supplying them, your state, and your actual usage all affect the price of utilities. All things considered, the price can be upwards of three hundred dollars a month. However, the cost doesn't have to be a nasty surprise. You can always ask utility companies for the history of the property, and always remember that the cost usually rises during the summer, so never budget using winter's bills.
6. HOA Fees
No matter what your opinion on HOAs, whether you believe they're controlling or are a necessity, most neighborhoods have them. They are usually charged with making sure the neighborhood is kept clean, safe, and overall a pleasant place to live. They also cost money, and the rate can be anywhere from one hundred to one thousand dollars a month, depending on the neighborhood. Make sure to know the dues before you buy the home and be aware that the cost may change on an annual basis.
While there are many things to do when buying a home, every little detail must be considered because every little detail adds up to a lot of money. Don't be caught off guard, and remember to always do your homework when making such a huge purchase.
Were there any unexpected costs when you bought your home? What was something you ended up paying for?
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