When it comes to buying a home for the first time, here are five expenses that typically shock buyers:
1. Closing costs. As you close on your mortgage and get ready for a laundry list of costs (mortgage taxes, lender fees, attorney fees, etc.), you’re usually looking at an average of 2% to 5% of the total cost of the home. It’s always a good idea to talk to your lender to get a sense of what your closing costs will be in advance so you can avoid any surprises.
2. Home maintenance. According to the Harvard University Joint Center for Housing Studies, you should plan on paying 1% to 2% of the value of your home every year for maintenance purposes. That number tends to vary, though, and according to Jeremy Wacksman, the CMO of Zillow, the upkeep for condominiums and attached townhomes tends to be lower than single-family homes. Some of the most common maintenance requests, according to studies done by Zillow and Thumbtack, were house cleaning, yard care, gutter cleaning, and power washing. Prices do vary wildly based on location, so my team of home inspectors can help you estimate what routine jobs will cost in your neighborhood. Sites like Angie’s List and Thumbtack are also very helpful for providing estimates.
3. Property taxes. Property taxes aren’t stagnant. The tax foundation has a property tax data lookup tool that you can use when planning expenses. If you believe your property taxes are higher than they should be, you can hire an attorney to help you grieve your taxes, usually for a percentage of the money that person will save you. You can also do it yourself and save on the fees.
4. Utilities. Utility costs can cost as much as property taxes, but estimates can range anywhere from $2,600 to $3,500. The national average is actually $2,964. To get a clear sense of what to budget, you need to ask someone who lives in the neighborhood you’re considering buying in to give you a peek at their monthly bill while adjusting for the size of the home you’re about to buy. You can also contact your utility company. This can really be eye-opening when it comes to your lawn care, water bills, groceries, and other similar items.
5. Homeowners insurance. If you’re getting a mortgage, you’re required to have homeowners insurance. Even if you pay cash for your home, you should pay it anyway. According to the Insurance Information Institute, the average annual premium is $1,132. You can save yourself a significant amount of money by shopping around both online and offline. Ask about what discounts you can get, and also ask about what discounts you can get for security systems, working from home, and bundling coverages for your home with your auto insurance policy.
If you have any more questions about first-time homebuyer expenses or you’re thinking of buying or selling a home in our area, don’t hesitate to reach out to me. I look forward to talking to you soon!