Buying a home can be a costly process. During all the excitement of searching for and finding the perfect house, negotiating a price and terms, and getting ready for settlement, it’s easy to lose sight of what happens after closing. Sometimes buyers aren’t prepared for the expenditures that might be required after closing. Here are 8 of the top things new homeowners spend money on.
- Appliances: This doesn’t apply to all homeowners, but if you’re buying a brand new or outdated home, you might need to work new appliances into your budget. If you’re updating a kitchen completely, be prepared to spend up to $10,000 on appliances, depending on your taste level and how technical you want to get. If you’re on a budget, Craigslist is a great source for finding inexpensive appliances.
- Window Coverings: Again, the total cost here depends almost entirely on your tastes and budget. If you’re the DIY type, you’ll be able to save a lot in this area. If you prefer to buy window treatments, be prepared to spend up to $2,000, especially if you go custom.
- Furniture: If your new home is bigger than your previous one, will your current belongings be enough to fill it? If you’re downsizing, you’ll need to determine whether your current furniture will fit in the new house. Taste dictates how much you spend on furnishings. (We’re sensing a pattern here!) Options range from big box stores like Target and IKEA, to specialty stores like Rooms To Go and Ashley Furniture, to high-end boutiques and custom-built furniture.
- Homeowners Association or Regime Fees: Most HOAs and property regimes can run on about $100 a month, but some charge more and some charge less. Make sure you look into a neighborhood’s HOA fees and what amenities are included before you decide to buy. Some higher end neighborhoods have charged up to $1,000 per month. Others offer fewer amenities and are able to charge just a couple hundred per year. Fees can go up annually, and some HOAs and regimes might charge additional assessments for unexpected repairs or other issues.
- Insurance: The cost of homeowners insurance varies by state, but a good nationwide average is about $700 per year. Insurance payments may be tied into escrow or included HOA dues, or they might be due annually or monthly. Some areas also require flood insurance, which is an additional policy that can get pretty expensive. Check whether your policy covers things like hurricanes, earthquakes, and personal property loss or damage. You might need to purchase these separately.
- Property Taxes: Buyers who purchase new construction could be surprised when their property tax bill goes up. Tax assessments for new construction are usually based on the empty lots on which the homes are built. Upon reassessment, that amount could double or triple. Taxes also vary by state and school district.
- Utilities: Utility bills can be a rude awakening for some homeowners! Older homes tend not to be energy efficient, which makes for higher heating and air costs. The size of the home and number of residents come into play here as well. Before you buy, call the local utility company and get a free estimate based on the history of how much has been charged in the past. Don't forget to budget utilities for both summer and winter.
- Repairs and Maintenance: It’s always a good idea to keep a few thousand dollars in an emergency fund. Maintenance and repair issues can crop up out of nowhere (an HVAC system on the fritz or a backed-up sewer system, for example). Charges can include standard fees, labor, and parts, so there’s really no telling how much you can expect to pay in any given situation.