There’s no denying homeownership has many enticing perks. In fact, for many, a home can be a very valuable asset. It is also one of the most expensive purchases many people make in their lifetime. However, many novice buyers are often surprised by the massive bite homeownership can take on their budgets.
If truth be told, several expenses need to be taken into account when owning a home. And it’s not limited to the basics alone like mortgage and utilities. There’s also a multitude of other hidden expenses like roof maintenance inspection, property taxes, and homeowners association fees, among many others.
The National Home Buyers Association (NAHB) revealed that a home purchase has a ripple effect that can cause most new homeowners to spend more than they actually intend to. Below are some potential hidden expenses you’ll likely face as a new homeowner and how you can avoid them:
Your New Home Has Stealthy Energy Hogs
At times, there are energy hogs at home that can eat up more than the fair share of the household power. Surprisingly, many homeowners don’t realize their cost until the energy bills come in.
Case in point: apart from molds, there’s something else you should look for in your home’s basement—furnace fans. While unfortunate to note, many homeowners don’t even realize their home has a furnace fan that consumes so much energy.
Furnace fans work by circulating air from the furnace or heat pump through the duct system and into every room. If your new home has central air conditioning, they circulate cool air using the same system.
Furnace fans are considered high energy users. If they are hidden away in the basement, they are considered one of the household’s biggest energy hogs, consuming at least 10 percent of the American household’s overall electricity use.
As a general rule of thumb, it would be best to check with energy raters and auditors so your home can be evaluated and you will be given guidance on the various ways you can improve your home’s comfort and energy efficiency.
In addition, many homeowners purchase new appliances to match their new homes. Unfortunately, they often end up spending more than they’re supposed to aside from significantly adding to their energy cost.
While some homes are furnished with appliances, many homeowners prefer new models. Typically, most homeowners spend money on washers, dryers, televisions, fridges, and computer systems.
While getting new appliances can be really tempting when you have a new home, you need to assess first if the appliances still work fine and can even work with proper maintenance. When you use the appliances that come with the home, you would be able to save a significant amount in your first few years of homeownership.
You are Purchasing Furniture Just to Fill Up Extra Space
Many homeowners purchase a home with more space compared to the one they were living in previously. The usual tendency of most is to fill up that empty space with furniture. On average, new homeowners spend as much as $5,025 on new furnishings. That’s around $3,364 more than most existing homeowners spend on furniture.
Much of the money goes to bedroom furnishings, particularly mattresses. Many new homeowners often outspend existing homeowners when it comes to purchasing bedroom furniture. Spending a significant amount on a new home seems logical for most homeowners.
Many families invest in a new home because they are adding a new family member and can use more room. Understandably, a new family member will also need a new bed and other bedroom furniture. Another item most new homeowners invest in is a couch.
To avoid spending money on furniture when you have a new home, don’t go out spending money just to fill some empty rooms or space. This is especially true if your need for furniture or an extra couch is not really that urgent.
You are Undertaking Remodeling Projects Right Away
For many, one of the best parts of moving into your own home is you no longer have to worry about dealing with a landlord. However, this also means you will be responsible for the maintenance of your own home. Even if your home is new, expect that you’ll eventually need to spend money on maintenance.
For instance, appliances can break down, and you would need to take care of it each time. Each year, most homeowners spend between 1 and 4 percent on maintenance. However, some statistics show that new homeowners spend way more if they purchased a new home than those who have owned their homes for many years.
For new homeowners, most of the remodeling projects are spent on new driveways, patios, or fences. To avoid expenses of this nature, don’t start any remodeling projects within your first year of homeownership. If it’s a project you have been considering for quite some time, consider saving up for it for a few years.
Aside from the possible hidden costs mentioned above, other latent expenses can come with a new home. The list of possibilities is endless, so the best thing you can do as a new homeowner is to set aside money for those hidden and unexpected expenses.
Financial experts suggest setting aside at least 1 to 2 percent of your mortgage for hidden expenses. While most mortgage lenders won’t factor this into their equation, this is something you should take into account as a homeowner.
Owning a new home is undeniably a good thing. However, before you sign on the dotted line, make sure you are prepared for homeownership’s actual cost, hidden expenses included.