8 Things You’ll Regret Not Including in the Budget for Your First House
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Buying your first house is a mixture of excitement, pride and anxious nail-biting. While you’re busy envisioning your perfect kitchen or the ideal backyard for summer BBQs, it’s easy to overlook some less glamorous, yet very critical budget items.
Here’s a breakdown of those sneaky expenses you’ll want to include in your budget, so you’re not caught off guard.
Closing Costs
Closing costs often take first-time buyers by surprise. These are the fees and expenses you pay to finalize your mortgage beyond the down payment, and they typically range from 2% to 5% of the loan amount.
The total typically includes appraisal fees, title searches, attorney fees and more. If these expenses catch you by surprise, you’ll be out more than your pocket change, so factor these into your budget planning.
Home Inspection
Before you get the keys to your new home, you’ll want to have it inspected. It might seem like an extra expense now, but it can save you from costly surprises down the road.
A good inspector will check the house’s structure, plumbing, electrical systems and more, ensuring you know exactly what you’re getting into. Consider it a small investment for peace of mind and potential negotiation power.
Moving Expenses
Sure, you might not have a grand piano to move, but even a modest move can cost more than you’d expect.
Whether you’re hiring professionals or doing it yourself, you’ll have to purchase things like packing materials, a truck rental and maybe even insurance. And if your friends are helping, you’ll at least owe them pizza and drinks, right?
Immediate Home Improvements
That avocado-green toilet might be retro chic, but if it’s not your style, you’ll probably want to replace it sooner rather than later. It’s common for new homeowners to have a list of immediate changes to make to their new place.
Whether it’s replacing locks, painting rooms or fixing what the previous owner thought was a ‘handyman special,’ it’s a good idea to set some money aside for these early home improvements.
Furnishing and Decorating
A house doesn’t feel like a home until you put your personal touch on it. Furnishing and decorating can be fun, making it easy to get carried away while the costs pile up.
Even if you’re thrifty or plan to slowly accumulate pieces, you’ll likely need some essentials upfront. Don’t forget to budget for curtains, lamps, rugs and other items that make your space feel cozy and complete.
Ongoing Maintenance and Repairs
Unlike when you’re renting, your home won’t come with a landlord you can call if something breaks. So, setting aside money for ongoing maintenance and unexpected repairs is in your best interest.
From a leaky faucet to a broken furnace, these things have a knack for happening at the most inconvenient times. A good rule of thumb is to save 1% to 3% of your home’s value each year for maintenance.
Property Taxes and Homeowners Insurance
These aren’t the most exciting aspects of homeownership, but they’re unavoidable. Property taxes and homeowners’ insurance will add a significant amount to your monthly housing expenses.
Make sure you understand these costs upfront and factor them into your regular expenses. Sometimes, these can be included in your mortgage payment, but it’s good to know the details either way.
Utilities and Services
If you’re used to living in an apartment, you might be in for some sticker shock with utility bills for an entire house. Water, electricity, gas, trash service and (possibly) HOA fees can all add up. Research the average costs in your new area before finalizing your budget.
Purchasing your first home is a huge step, and it’s easy to get caught up in the excitement. By planning for these often-overlooked expenses, you’ll be in a better position to enjoy your new home without the stress of unexpected costs.
Editor’s note: This article was produced via automated technology and then fine-tuned and verified for accuracy by a member of GOBankingRates’ editorial team.
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