3 Hidden Home Costs When Buying Your First Home
So you’re ready to buy your first home! Well, there are several hidden home costs that you should remember to include in your home budget. Here we discuss 3 common hidden home costs.
Hidden Home Costs vs Basic Costs
You have your pre-approval letter in hand and are ready to start searching for your first home, but what should you include in your budget? There are many things that you don’t think about that adds to your expenses when you own a home. These costs should be included in the amount of house you can afford.
When you first apply for a home loan, the loan officer calculates how much you can afford based on your income, credit score, and other factors. The loan company then provides you a pre-approval letter with the max amount they are willing to lend you. Usually your mortgage payment includes basic costs like the interest, insurance, and property taxes (escrow). However, there are three common costs that should be included as well.
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Maintenance Hidden Home Costs
The main cost that first time home buyers forget about is maintenance costs. Regardless of buying an old home or a new construction, maintenance costs will always come up. These maintenance costs can include:
- General Maintenance (filters, fixtures, lights)
- Landscape Maintenance
- Structural Maintenance (Plumbing, roof, foundation)
- Pest Control
However, how much should you budget for maintenance costs? There are many rules to help determine the right budget. There is the 1% rule, in which you save 1% of the total cost of the home. Although, this percentage varies depending on the age of the home. For example, newer homes will require less maintenance than older homes. You can read more on maintenance costs here.
In addition to maintenance, your first home may need some upgrades. There are many upgrades you may want to make. For instance, changing the flooring, fixtures, remodeling the kitchen or bathroom, are the most common upgrades.
Of course, these can get costly. If you’re crafty, the cost can be reduced. Regardless the tools and materials still add up! These costs can range from a few hundred to a few thousand. For example, my current home, I spent $8,000 on steps and a retainer wall since my home is on a hill. This upgrade was necessary to keep the hill from eroding. Likewise, your home may require similar upgrades. However, we did calculate it into the purchase price and our budget.
Finally, we have decorating costs. Of course you want to turn your house into your home. Decorating your home with shiny new furniture and other decor is the fun part of owning a home. I love finding new things that goes with the theme of my home. However, it can get costly!
Even if you buy pre-loved furniture or decor, the costs still adds up. For example, I am a thrifter and purchase many secondhand furniture and decor. However, most of the time I still need to DIY them.
Regardless if you buy new or pre-loved it still costs money. Which is why you want to ensure you have the ability to decorate your home without putting a strain on your wallet.
There are so many costs to consider for your home budget. This does not include your basic bills like electric, water, gas, etc. As a result it can make you feel discouraged to purchase your first home. However, creating a budget for these costs can help ensure you purchase a home that you can afford. For more on budgets you can read our blog here. With careful planning, you can purchase a house and still have the funds to make it a home!