Buying a home is a dream come true for many, but the financial responsibilities don't stop once you have the keys.
While you might have budgeted for your mortgage, there are several hidden costs that can catch new homeowners by surprise.
Knowing what to expect can help you plan better and avoid financial stress later on.
Your home might look perfect when you move in, but over time, things will start to wear down or break.
From a leaky faucet to a malfunctioning HVAC system, maintenance and repairs are part of the homeowner's journey. It’s wise to set aside a portion of your budget—typically about 1-4% of your home's value annually—for upkeep.
For smaller repairs and improvements, consider tackling them yourself to save on labor costs. There are tons of online resources and tutorials available to guide you through basic home maintenance tasks. DIY it up!
If you’re facing larger repairs or improvements and need additional funds, refinancing your mortgage could be a smart solution. By refinancing, you might lower your monthly mortgage payment or tap into your home’s equity to cover significant repair costs.
Relevant article: Don't let your tax return control your home repairs: a guide to smart saving
Property taxes can be a shocker, especially if you’re coming from a rental situation.
These taxes vary by location and can increase over time as your home’s value grows. Make sure you understand how much you'll be paying annually and plan for possible increases in the future.
It’s a good idea to check if your mortgage includes an escrow account, which helps manage these payments alongside your mortgage.
One way to manage your property tax burden is by taking advantage of the homestead exemption, which can provide HUGE savings.
In Louisiana, homeowners who live in their primary residence can apply for this exemption, which reduces the assessed value of your home by up to $7,500. This means that a portion of your home’s value is safe from property taxes, lowering your annual tax bill. Where do we sign up??
To qualify, you need to file a homestead exemption application with your local parish assessor's office, usually within the first year of ownership.
Once approved, the exemption will automatically renew each year as long as you continue to live in the home!
Protecting your investment is important, so homeowners' insurance is a must.
However, the cost can vary based on things like location, the age of your home, and coverage limits.
If you live in an area prone to natural disasters, like hurricanes or floods, you may need additional coverage, which can drive up your costs. *cough* Louisiana *cough*
To manage insurance costs, get quotes from multiple insurance providers to find the best rates for homeowners insurance.
If you were renting, utilities might have been included in your rent, but as a homeowner, you're responsible for paying everything. The cost of water, electricity, gas, internet, pest control, and even trash collection adds up quickly.
Consider investing in energy-saving upgrades:
If your new home is in a community with an HOA, you'll likely have to pay monthly or annual fees.
These fees cover the maintenance of common areas, amenities, and sometimes services like snow removal or landscaping. While these can add value to your living experience, they can also add up in cost, so it’s important to factor them into your overall budget.
Relevant article: HOA: a blessing or a curse?
For more detailed information on navigating the homebuying process, download our free Homebuying Guide.
The "Complete Guide to Buying the Home You Love" is a comprehensive how-to guide walking you through every step of the home buying journey.
This jargon-free roadmap covers 12 steps you can take to confidently buy the home of your dreams, regardless if you are a first time home buyer or an experienced homeowner.
Owning a home is a big milestone, but with smart financial planning, you can navigate the challenges that come with it. In time, you’ll likely find that the joy and sense of stability that come with owning your own home far outweigh the concerns.
Happy homeowning!
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