10 Unexpected Expenses to Plan for When Buying a New Home
If you’re in the market for a new home, you probably have done your homework on all of the available houses in your target neighborhood. You’ve got your trusty real estate agent at your side, probably have already gotten approved for a loan, and have a few homes on your list that you’re interested in seeing or purchasing. Although you might have a strong budget put together, you might want to give it another look to see if you’re accounting for a few extra expenses along the way.
Here are 10 costs that could take several new homeowners by surprise:
New Locks – Although it’s unlikely that someone with the old set of keys would come into your new living quarters, changing the locks will ensure that only you and those whom you trust will have access to your home. Remember, contractors, agents, and relatives of the previous owners could still have means of getting into your home if you leave the locks unchanged. Take into account all entry doors, including the front, side or back doors, garage doors, and any other points of entry.
Appliances – This could go one of two ways. Either the previous owners will take their appliances with them, or they may leave the appliances in the home, leaving you to foot the bill should the appliance fail. Whether by age or by malfunction, appliances such as refrigerators, stoves, and washers and dryers do stop working, so be prepared to replace at least one of these appliances when you move.
Property Tax Increases – Smart homebuyers will take property taxes into account when calculating their monthly mortgage payments. These expenses are sometimes paid separately but usually are amortized over the year into smaller monthly payments. Keep in mind that taxes often do go up over time, so make sure to have some breathing room in your budget.
Hazard Insurance – Although many people will purchase homeowners insurance, not everyone will take natural disasters such as floods or earthquakes into account. Be sure to talk with your agent to see if these items are covered in your policy.
Moving Expenses – Even if you’re moving across town, moving in itself can be costly! From hiring a moving van or professional movers to purchasing boxes, bubble wrap, and other packing materials, you will need to factor in these hidden yet necessary costs into your budget.
Storage Unit Fees – Do you need to de-clutter your space to give homebuyers a better idea of just how much space you have in your current home? Are you downsizing to a smaller home and just don’t want to part ways with your items yet? You’ll probably need a storage unit of some sort for that. Be prepared to pay a monthly fee for your storage unit if you don’t plan on selling your extra items before moving.
Pest Control – Not every seller is willing to divulge information about any recent bug or pest problem they’ve experienced. Additionally, not all home inspections will monitor for signs of infestations. Don’t be surprised if a few extra bugs or critters find your way into your home. Factor in enough money to call in an exterminator should you receive any unwanted guests.
Utility and Service Connection/Transfer Fees – If you’re relocating, some cable and utility companies might charge fees for new installations or relocation requests. Be sure that you know how much money having the lights on will cost you and save back for utilities. Homeowners, be sure that you include waste and water into your budget as well!
Your Last Mortgage or Lease Payment – If you want to avoid owing your current mortgage or rent payment in addition to your new mortgage payment, try to time the expiration of your current agreements so that they won’t overlap with your new agreements. Renting? Try to leave when your lease is up. If this isn’t possible, talk to your landlord. He or she may accept a premature lease termination if they are able to locate a new tenant shortly.
Closing Costs – You might have already thought about closing costs, but the amount of the costs can vary. Your lender can offer good-faith estimates for appraisals and other fees; however, if the costs wind up being more than their estimate, they have no legal obligation to pay the difference. Keep in mind, too, that closing costs can increase by up to 10% by the time the deal is finalized.
Even though owning a new home can come with a few financial surprises, it’s always smart to have a backup in case of emergencies. Talk to your agent at Madison Mutual today to review your homeowners insurance policy by calling 1-800-766-MMIC!