New homeowners spend an average of over $7,080 in the first year to fix issues left behind by previous owners, finds a recent survey released by HomeAdvisor. As a new homeowner myself—we purchased our house in Savannah in May of 2020—I learned about that firsthand. When we bought our home, we used almost all our savings for the down payment and closing costs. So we got a rude shock when, after the particularly rainy summer, our living room started to buckle. Without the funds to fix it immediately, we just blocked the area with an end table, and we hoped our house didn’t fall into the ground. Thankfully, we were slowly able to save the money to have our 100-year-old home repaired this fall. But there’s no doubt the cost was a surprise—one I wish I’d known about (I still would have bought my house, but I definitely would not have bought a new couch). Below, we outline the hidden costs of home ownership you should prepare for in advance.
1. Immediate and unexpected fixes
There are the fixes you know in advance you’ll want to do ASAP—the awful bathroom paint or the wall-to-wall carpet in the finished basement—and then there are the unexpected immediate fixes. Indeed, the HomeAdvisor survey revealed that 85% of homeowners say they had to fix at least one problem they were unaware of when they bought the home. These might include a broken HVAC system, a leaking roof or a broken freezer that might need to be fixed in the first few weeks after gaining ownership of the house. “In short, don’t rely on the inspection to ensure there are no major expenses in your immediate future,” says Priya Malani, the founder and CEO of Stash Wealth.
Even if you’re tempted to put off repairs or other forms of home maintenance, ultimately, keeping your house in good shape is worth the investment. “When it comes to owning a home, it’s almost always best to take the financial hit as soon as repairs are needed to prevent even larger issues in the future,” says Malani. “Five-thousand dollars now might end up saving you $50,000 in the future.
If you’re a first-time homeowner, chances are you’re moving from a smaller space into a much larger one. For example, we moved from a 700-square-foot apartment in Brooklyn to an 1,800-square-foot house with a backyard. We barely had enough furniture to fill two rooms, forget about the whole house. And it’s often more expensive than you’d think: We spent roughly $10,000 the first year buying furniture for our new house—and plenty of people, especially in these times of high inflation, will need to spend more.
3. Rising utility bills
Think that you had your budget figured out before you moved in? Think again. A larger home means larger utility bills, including for gas and electricity. Use a utility rate calculator like this one to project costs.
4. Property taxes
Especially in this hot market, prepare for an uptick in your property taxes. “The new higher assessed value from the sale can lead to a much higher property tax bill,” warns Greg McBride, the chief financial analyst for Bankrate. He notes that property taxes usually rise to meet the new value of the house a year after the sale.
5. Homeowner’s insurance
Know that your homeowner’s insurance may increase after the first year. “The sale increased your property value, which increases replacement costs, and in turn, increases premiums,” says McBride.
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