Getting the keys to your first home is a huge accomplishment. After months of searching, signing papers, and planning, you’re finally a homeowner. It’s an exciting time, but it also comes with new financial responsibilities. While you’ve carefully budgeted for your monthly mortgage payment, many other new homeowner expenses come with owning a property.
Many first-time homebuyers are surprised by these extra expenses. This guide is designed to give you a clear and simple breakdown of what to expect financially. By understanding these costs, you can create a solid budget and enjoy your new home without any unwelcome financial surprises.
Upfront Costs: What You’ll Pay Right Away
Upfront new homeowner expenses are often the most unexpected, especially for first-time buyers. The first set of expenses hits before you have a chance to unpack. These one-time costs are part of the homebuying process and the initial settling-in period.
Closing Costs
When you finalize your home purchase, you will pay closing costs. These are fees for the various services involved in the transaction, separate from your down payment. They typically range from 2% to 5% of the home’s purchase price. For a $350,000 home, that could be anywhere from $7,000 to $17,500.
Your lender will provide a “Closing Disclosure” form a few days before closing that lists these exact costs. Common closing costs include:
- Lender Fees: Charges from your mortgage provider for creating and processing your loan.
- Appraisal Fee: The cost to have a professional appraiser determine the value of the property.
- Home Inspection Fee: The cost of hiring a professional to check the home’s condition.
- Title Insurance: A policy that protects you and the lender from issues with the property’s title history.
- Attorney Fees: Costs for legal services to review documents and oversee the closing.
Moving and Relocation Expenses
Next, you need to get all your belongings to the new house. The cost of moving can vary widely. Hiring professional movers for a local move can cost several hundred to a few thousand dollars, while long-distance moves will be significantly more expensive.
If you go the do-it-yourself route, remember to budget for a truck rental, boxes, packing tape, and other supplies. It is also a good idea to factor in some money for pizza and drinks for any friends who help you out. Here are some ways you can save on moving costs.
Immediate Home Needs
Once you move in, you’ll likely have a list of things you want or need to do right away. Changing the locks is a top priority for security and a very wise first step.
You might also need to buy major appliances like a refrigerator, washer, or dryer if they weren’t included in the sale. Don’t forget window treatments like curtains or blinds for privacy. These initial purchases can add up quickly, so it’s smart to set aside a fund for them.
Ongoing Costs of Homeownership
After the initial move-in period, ongoing new homeowner expenses become part of your regular monthly budget. These are the costs you will need to build into your monthly budget for the long term.
Property Taxes
As a homeowner, you are required to pay property taxes to your local government. These taxes fund public services like schools, roads, and fire departments. The amount you pay is based on your home’s assessed value and local tax rates.
Property taxes are often rolled into your monthly mortgage payment through an escrow account. Your lender collects the funds and pays the tax bill on your behalf. If not, you will need to pay them directly, usually in one or two large payments per year.
Homeowners Insurance
Your mortgage lender will require you to have homeowners insurance. This policy protects your investment against damage from events like fire, storms, or theft. It also provides liability coverage in case someone is injured on your property.
Like property taxes, insurance premiums are often included in your monthly mortgage payment via an escrow account. Annual premiums can range from a few hundred to a few thousand dollars, depending on your home’s value, location, and coverage level.
Utility Bills
When you were renting, some utilities might have been included in your monthly rent. As a homeowner, you are responsible for all of them. This includes:
- Electricity
- Natural gas or oil for heating
- Water and sewer
- Trash and recycling collection
- Internet, cable, and phone services
These costs can fluctuate seasonally. For example, your electricity bill will likely be higher in the summer if you run the air conditioning, and your heating bill will increase in the winter.
Maintenance and Repairs
Maintenance is one of the most important new homeowner expenses to plan for, especially as your home ages. This category is often the biggest adjustment for new homeowners. There is no landlord to call when the sink starts dripping or an appliance stops working. It’s crucial to set aside money every month for both routine maintenance and unexpected repairs.
A common rule of thumb is to save 1% to 3% of your home’s value each year for maintenance. For a $350,000 home, this means saving $3,500 to $10,500 annually, or about $290 to $875 per month. This fund will cover:
- Routine Maintenance: Gutter cleaning, servicing your HVAC system, pest control, and lawn care.
- Minor Repairs: Fixing a running toilet, repairing a broken appliance, or patching a small hole in the drywall.
- Major Replacements: Eventually, you will need to replace big-ticket items like the roof (every 20 to 30 years), the water heater (every 10 to 15 years), or the HVAC system (every 15 to 20 years).
Other Common Expenses to Consider
Some new homeowner expenses aren’t required but are common as you settle into your home. Being aware of them will help you plan better.
Homeowners Association (HOA) Fees
If your new home is in a planned community, condominium, or a neighborhood with a homeowners association (HOA), you will have to pay regular HOA fees. These fees cover the maintenance of shared amenities like pools, parks, and clubhouses.
HOA fees can range from under $100 to several hundred dollars per month. Be sure you understand the cost and the rules of the HOA before you buy.
Yard and Exterior Care
If your new home has a yard, you’ll need tools and equipment to take care of it. This could mean buying a lawnmower, a rake, a shovel, and other gardening equipment. You might also want to invest in outdoor furniture, a grill, or plants to improve your outdoor living space.
Furniture and Personalization
Your new home might be larger than your previous apartment, meaning you have more rooms to furnish. While you don’t need to furnish the entire house at once, you should budget for any essential items you will need right away. You may also want to spend money on paint and decor to make the house feel like home.
Prepare for a Confident Start
Becoming a homeowner is rewarding, but understanding new homeowner expenses beyond the mortgage is key to a confident financial start. By understanding and preparing for these additional expenses, you can make a smooth transition into homeownership. Create a detailed budget that includes these costs so you can enjoy your new home without financial worry. Welcome home!
We hope you’ll consider S&A Homes when you’re ready to make the move into a new construction home. We invite you to learn more about new home opportunities from S&A Homes throughout Central and South-Central Pennsylvania. Call 1-855-SAHome1 or visit SAHomeBuilder.com to learn more about our new home communities, build on your lot opportunities, floorplans, and more.