Home Purchase Costs You May Have Forgotten

When you purchase a home, the majority of your budgeting revolves around the direct costs associated with it. Your EMD, home inspection, down payment and closing costs are all part of your budget. It’s important to consider how your budget will change after you sign the contract to buy your first home or upgrade to a better one. As you plan for the months and years ahead, here are some expenses to consider.

Moving expenses

Moving costs will be incurred at the same time that closing. You will need to pay for moving. This is dependent on a number of factors such as the distance you are moving and the items you have.

If you are looking to save money on your move, consider logistics and time. To save time for the movers, stack boxes close to the door. You can label everything and use stickers to color code boxes so it is easier for the movers. Make sure everything is ready for the movers to arrive. It’s not worth paying for their time to empty a closet or cabinet you didn’t know about.

Updates and Upgrades

Before you can settle in, there may be a few things that you need to do to your home. These can be determined based on your preferences or the home inspection. You’ll save time and frustration in either case.

If you are serious about upgrading your space, you should talk to a professional about value-added improvements that can increase your home’s equity. Make sure to upgrade your kitchen and bathroom so they are more functional when you sell. Exterior upgrades can improve curb appeal and increase outdoor space. These improvements will pay off for many years.

Cost of Living Increases

There are many reasons why a new home might lead to a higher living cost. You might have to commute longer, which could lead to higher transportation costs. You might shop at your local gourmet market more often than at a large-box supermarket. You might be asked or required to join the country club in your new neighborhood. You might find yourself enjoying new dining and shopping opportunities that you didn’t have before.

While you have control over many of the costs associated with your move, you should keep in mind why you are moving in the first place. If you cannot afford to move to a lively neighborhood, or to rural areas, it is not worth the effort. Balance your home-buying budget with the reality of your new area.

Property Tax Homeowners Insurance

If you move to a more expensive place or upgrade to a larger house, your property taxes will likely increase. Your homeowners insurance could also become more costly. These are often prorated and pay along with your mortgage payment. This could have a major impact on your bottom line. Although you cannot control property taxes, there are things you can do to reduce them.

HOA Fees

If you move to a community with a homeowners association you will be charged additional fees. HOA fees (or condominium fees in the case for condominium purchases) are used to fund common areas and amenities as well as the hiring of and payment of staff. These mandatory fees can be paid on a monthly basis, quarterly or annually, depending on your association’s rules.

Utility Prices

Utilities may vary depending on many factors. You may find that utility rates are higher in your new city or market. Or, costs can rise for the following reasons:

  • Moving from a smaller home to a larger home
  • If you go from a more energy-efficient newer home to an older home
  • Transitioning from an apartment or condominium to a single-family home
  • Moving from a home with few special features to one with more, including upgraded appliances, multi-zone HVAC, pool, spa, or others

When you are preparing your budget for upgrades and improvements, it is worth considering whether there are any changes you can make to lower your monthly home operating costs. Ask your local power company for a home energy audit to determine where improvements can be made. This could include adding insulation, replacing windows or old appliances with newer ones.

Outdoor Maintenance Costs

You may feel sticker shock when you move from an apartment or condominium to a single-family residence with large yards or expansive outdoor spaces. Other than regular lawn maintenance labor and equipment, you will also need to consider other landscaping tasks and tree care. Maintaining your roof, gutters, exterior trim, siding, stonework, hardscaping and deck will all be important.

Consider whether you will do the work yourself, or hire a professional. You may find it difficult to get out of your car and spend time in the garden when you return home at night. You may enjoy taking care of the plants on the balcony of your condo, but you might not like having to mow the lawn every week for several months.

To get an idea of how your home purchase will affect your household budget, speak to your real estate agent. They can help you research the numbers and make informed decisions so you can plan ahead financially.

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