Eight Expenses New Home Owners May Not Be Expecting
You did it! You survived the years of saving for a down payment, the open houses, the paperwork, the outrageous bidding wars and the stress of it all, to finally buy a new home. As a first time homeowner, the next year will be exciting, but it will also likely be expensive; there will be additional expenses that many new homeowners wouldn't expect, or may forget to factor in when budgeting.
1. Closing Costs
Before you even get possession of your new home, many new homeowners are taken aback at the final tally to just close the deal. Closing costs vary, but the Canada Mortgage and Housing Corporation suggests you budget for the equivalent of 1.5 per cent to 4 per cent of the purchase price.
2. Moving Costs
How much it costs you to move will vary on a variety of factors including how much "stuff" you're moving, how far the distance travelled will be, and whether you're moving during peak times to name a few. However, reports suggest that you can bank on $1,000 to $2,000 if hiring a mover.
3. Home Insurance
If you're a first time home buyer, chances are you were previously renting. Renters with tenant insurance pay a lot less for coverage than owner's with home insurance because there is less to cover. With a home, you're covering not just your liability and possessions but also the structure too. Home insurance premiums, like car insurance rates, can vary considerably; so don't assume the insurer who offered you a competitive tenant insurance policy is the best provider for your home insurance too. Compare home insurance rates to be sure.
4. Home Insurance Upgrades and Repairs
If you've bought an older house, your home insurance provider may require that you make some repairs or upgrades. The most typical examples would be to replace galvanized steel plumbing, knob and tube wiring, and fuel oil tanks. They could also require you to upgrade a 60-amp electrical service and have a wood-burning stove cleaned and inspected on an annual basis.
5. Personal Home Touches
Chances are, early on, you'll want to make the house you just bought, feel more like your home. Even what appear to be the little things add up quickly: paint, painting supplies, window coverings, mirrors, lighting fixtures, a new mailbox, small pieces of furniture, floor coverings, indoor plants, and even plants for the garden. All these on their own may not cost a lot, but cumulatively, could bruise your bank account.
6. Property Taxes
Property tax is calculated as a percentage of the assessed value of your home. The percentage varies by province, and even by municipality. It's not uncommon, in fact it's likely, that you'll end up paying at minimum a couple of thousand dollars a year in property taxes.
7. Higher Utility Bills
As a first time home buyer it's easy to overlook the fact that the new home you just purchased is likely larger than your previous residence, and as a result will cost more to heat and keep lit. For some people, it will also be the first time they realize that there's a water bill too. Also, don't forget the additional fees that each company will charge to transfer or set up accounts.
8. Home Maintenance and Home Repairs
Leaks happen. Furnaces and water heaters break down. Roofs age. Lawn mowers and snow plows stop working. And, sometimes things deteriorate to the point where they're no longer efficient (washers, dryers, windows, insulation etc.). A new home is an investment, but it's an investment that needs to be cared for, kept up-to-date, serviced regularly, and occasionally repaired. Every year, "there will be something" and you need to be prepared for when that something happens because home insurance does not provide coverage for maintenance.
While all of these costs may sound overwhelming, nothing is more comforting than having a home to call your own. Prepare for the unexpected by incorporating these first time expenses into your budget before you seal the deal. That way you can say goodbye to surprises, and hello to happiness.
