Transitioning from life as a renter to a first-time homebuyer is a big, exciting step. Many things in your life will change, including how you save and spend money. When you rent your living space, your monthly housing expenses include your rent payment, as well as some or all of your utilities, and that’s about it. Your landlord or property manager should take care of everything else. As a homeowner, that’s not the case. You’ll be responsible for a number of expenses; many you probably haven’t even thought of yet. Here’s how you need to evolve your budget as a first-time homeowner, broken down into short- and long-term expenses.
Short-term First-time Homeowner Expenses
Moving — Whether you hire professional movers or rent a truck and DIY, you’ll have to pay to move your stuff from one place to another.
New Furniture — You’ll probably have more rooms to fill in your new home. Of course, you don’t need to fully furnish every room right from the start, but you’ll want to have the basics covered. Here are some ideas to help you furnish your new home for less.
Deposits and Hook-Up Fees — While the costs to set up electricity, gas, internet and other essential services might not seem like much individually, they can really add up when you have to take care of them all at once. Plus, it’s a time when you’re already spending a lot, so be sure to include these essentials in the budget.
Long-term Homeowner Expenses
Mortgage Payment — First and foremost, you’ll want to plan your budget so you can pay your mortgage payment, on time, every month. If you ever find yourself unable to make your mortgage payment, here are the steps to take as soon as you realize your predicament.
Utility Bills — You’re probably used to paying for electricity and other utilities, but you’ll be surprised how much more expensive they can be when heating, cooling and lighting a whole house. For planning purposes, check with the local utilities that serve your new area to get an estimate of how much average bills run during the different seasons for a home your size.
Landscaping and Upkeep — As a renter, you never had to worry about whether the lawn was tidy in the summer or the walkway was shoveled in the winter. But as a homeowner, you’re responsible for those maintenance tasks and more, both inside and outside the home. If you plan to have professional help, you’ll need to budget for it. But even if you DIY, you will need to buy the tools and equipment to help you perform these tasks correctly.
Homeowner’s Association Costs — Depending on where you live, you might have to pay homeowner’s association fees (and occasional fines for violations).
Major Home Repairs — Even if you are moving into a brand-new home, you will eventually have to pay for major repairs such as replacing heating and air-conditioning units, upgrading appliances or fixing faulty plumbing. Because you never know when these issues will arise, you’ll want to start (or continue) contributing to an emergency fund so you won’t have to use credit cards to pay for repairs.
It will take a few months to adjust to being a homeowner and all the responsibility that entails. Don’t be afraid to adjust your budget to accommodate these new expenses.