Being approved for a mortgage and realizing your dream of homeownership is a wonderful accomplishment – but it’s just the first step. Owning your own home involves a number of additional costs and expenses – some one-time, some ongoing, some well into the future – that you’ll need to plan for in your budget. Let’s go beyond the mortgage and take a look at the additional costs of homeownership.

One-Time Expenses    young woman imagining the costs of home ownership

Moving Costs — While it might be tempting to round up a few friends, a few trucks and pay everyone in pizza and beer at the end of the day, you’ll be better off hiring professional movers. They’ll get the job done faster and more efficiently, plus they’re insured should they damage any of your items, or should one them get injured on the job.

Be sure to read online reviews and ask for recommendations of reliable movers in your area. Call around to get estimates and comparison-shop before you make your final choice. You’ll want to have enough saved to cover the cost of the move, plus a tip for each person working the job.

New Furniture If you’re moving into a much larger space, you’ll want furniture to fill all the rooms. But it doesn’t have to be brand new. Check out yard sales, Craigslist, Ebay and thrift stores before spending big bucks at a furniture store. Remember that a fresh coat of paint or stain, new upholstery, accent pillows and decorative throws can transform pieces that don’t look quite right at first glance. If you feel you must buy new pieces, do so one at a time, and pay with cash (or use layaway, if available). Don’t be tempted to apply for a store credit card as a way to buy everything you want at once.

New Appliances The rules that apply to furniture also go for appliances. Check out gently used versions before springing for new ones. If you must buy new, prioritize your purchases and save enough to pay with cash, rather than purchasing on credit.

Recurring Expenses

Utilities — Once again, if you’re moving into a much larger space, watch your utility bills grow, too — particularly the heating and cooling costs. If your utility company offers it, consider going on a plan that “equalizes” your bills over the course of the year so you’re always paying close to the same amount. It will make budgeting for utility expenses much easier.

HOA — If you’re moving into a neighborhood with a homeowner’s association, there will be monthly or annual HOA membership fees. There may also be fines assessed if you violate HOA rules, so be sure to learn what they are and stick to them to avoid paying the price.

Homeowners Insurance — Although not required by law, most mortgage companies insist you obtain a homeowners policy before they will finalize your loan, and with good reason. Homeowners insurance protects your home, its contents, and other assets in case of fire, theft, accident or other disaster (certain geographical areas may require additional coverage for events such as floods or earthquakes).

Your homeowners insurance should cover the cost of rebuilding and refurnishing your home. Most policies allow you to pay annually or month-to-month. You may gain some savings by paying for a full year up-front. Plus, you won’t run the risk of coverage lapsing due to a missed monthly premium payment.

Property Taxes — This is another expense that will be new to you if you’ve never owned a home before. If it’s not already included in your house payment, you will receive an annual bill for property tax, which is determined by the county in which you live, and based on the assessed value of your home. It’s a good idea to save a little bit throughout the year to go toward your property taxes, so you don’t have to come up with the lump sum all at once.

Long-Term Expenses

Routine Maintenance and Repairs — Every homeowner must plan to perform routine repairs and maintenance. These expenses increase as homes age, but even new homes require regular upkeep to ensure they increase in value over time. In fact, neglecting basic home repair and maintenance can actually cause homes to decrease in value.

On average, homeowners spend one to four percent of the total value of their homes on maintenance and repair each year. Some years you’ll spend more, some less, but you’ll always spend something. We recommend setting up a savings account devoted to home maintenance and contributing to it regularly to ensure you have the funds ready when you need them.

Emergency Repairs — In addition to routine maintenance, every homeowner will eventually face a major repair or replacement, such as an air conditioning unit or hot water heater. This is when having emergency savings ready comes in really handy.

We recommend establishing an emergency savings account (separate from the home maintenance account) that’s strictly reserved for catastrophic events, including major home repairs. By having emergency savings as a safety net, you can avoid going into debt by having to charge a really big ticket item.