By Harjit Earnest – KeyBank Capital Region Home Lending Leader
The first year in a new house will bring all sorts of new joys, from decorating everything just the way you like it to spending your first holiday season in your own home. But the first year as a homeowner can also bring financial surprises — if you aren’t prepared.
Some costs of homeownership, like property insurance and utilities, will need to be factored into your budget. Other, optional costs, such as a patio set, grill, and any other creature comforts you may not have had if you came from an apartment, should be considered in your first year of homeownership so that you can start saving up as soon as possible.
To help you plan, here are some of the most common expenses associated with owning a home.
Recurring Homeownership Costs You Should Budget For
The recurring costs of homeownership are unavoidable; they’re the ones that you’ll need to pay for as long as you own a home. After one year as a homeowner, you’ll probably have a good idea of how much you’ll need to set aside for the following.
Property Insurance: You’ll need a homeowners policy to protect against unexpected losses due to natural or man-made disasters, theft, or accidents related to your home. In many cases this can be included in your mortgage payment so it is paid by the bank for you.
Utilities: Utility expenses include necessities like electricity, gas, water and sewage, and trash and recycling collection.
Home Services: You might want to budget for extra services like internet access, cable TV service, landline phone service, or home security monitoring.
Real Estate Taxes: As a homeowner, you’ll be responsible for real estate taxes, which may either be collected as part of your mortgage payment or paid separately. Your real estate tax liability may also increase if your property’s value is reassessed after your purchase. Real Estate taxes can also be included in your monthly payment to avoid lump sum payments. Please check with your loan officer referencing questions on this.
Lawn Care: You might pay fees to a Homeowners Association (HOA) that covers lawn maintenance for you. If not, you’ll need to budget for landscaping costs, including buying a lawnmower or paying for lawn care service. You’ll also need to budget for fertilizing your grass and caring for any trees and plants on your property.
Repairs: It would be wise to start an emergency savings fund as soon as possible for those inevitable times when an appliance breaks down or your HVAC or plumbing system needs to be fixed.
Additional Homeownership Costs You Should Consider
The first year in a home is the perfect time to think about home improvement projects and how much you’ll need to make the home of your dreams. While these projects can be costly, they can be worth the investment if they increase your enjoyment of the house and raise its overall value.
Here are some home improvements you might consider.
Cosmetic Changes: Painting projects can be relatively inexpensive if you’re just covering a few walls and are willing to do the work yourself. You’ll need to budget more to hire a professional crew, or if you want the house’s exterior painted. New flooring is another cosmetic change that can instantly update the look and add value to your home.
Exterior Upgrades: Exterior work may include adding a fence, repaving the driveway, building a deck, or installing new landscaping.
Remodeling: Large-scale renovations can be expensive, though you’re likely to gain some return on your investment if you end up reselling the house. You should start saving for these more costly projects as soon as possible.
If you’re feeling overwhelmed by the costs of homeownership and need help with saving, budgeting, or choosing between home improvement projects, a financial wellness review with one of KeyBank’s financial advisors can help you get the most out of your new home.
About the author: Harjit Earnest is Home Lending Leader for KeyBank in the Capital Region. NMLS #480702 . She may be reached at 518-612-6011 or [email protected].
Listing Your Home for Sale: Things to Do First
Perhaps you’ve outgrown your starter home and you’re ready for an upgrade. Or you’re ready to help an aging parent ease into retirement by providing them with an in-law suite.
Whatever your reason, selling your home might be an important move for you to make in the future. If this is the case, you need to know which steps to take before listing your home on the market.
Do Some Basic Research on Your Next Home
Don’t start the process of listing your home for sale if you’re not clear on what you’d like to buy first. Do you know where you’d like to move and what kind of house you want to have this time around? Have you scoped out the area and the surrounding community? Take time to differentiate your lists of must-haves and nice-to-haves and take an honest look at your finances to set your budget for your next home purchase.
Before you start worrying about real estate agents, listing your home, or marketing the property to potential buyers, focus on what’s right in front of you. For many homeowners, that’s some of the clutter that’s built up over the years since they’ve lived in the house.
If you want buyers to be able to imagine themselves living in the space, it’s time to declutter and deep clean.
Interview (and Choose) Your Real Estate Agent
One of the last steps to take before listing your home? Finding the right agent. This is an important relationship to get right, so take your time to interview multiple agents. Don’t be afraid to ask questions, and remember that you’re going to work closely with this person in a high-pressure situation. You should not only trust their professional judgement, but you should also feel comfortable working with them. A strong personality fit matters!