New homeowners should learn to manage their money continuously after they had moved into their proud new residences. One misconception about buying a new house is that their financial obligations have dwindled after the hefty down payment has been given.
The Motley Fool cautions these property newbies about the fallacy of that thinking and argues that unforeseen expenses can eat into their budget. That’s why the diligence to check cash flow and bank statements should still be in place, if not intensify. If you are among the 60 percent of Americans who have recently signed a contract with a bank or property management company to have your own digs, it is important that you watch your personal finances now.
Re-evaluate your home budget
First of all, re-evaluate your former home-related budgets and make the necessary adjustments. New homeowners tend to think that the amount they used to pay their condominium rent will equal their new mortgage payments. They give themselves their assurance by checking the fine print on the contract. They also compare the monthly fees of their former and new accommodations. What they do not take into consideration are the significant additional changes that go way beyond the numbers on the documents.
Homes can cost more to maintain than condominiums, flats, makeshift garages, or rooms for rent. Depending on the size of the property, costs of utilities like power and water can go up. Add more expenditures if your new digs have a garden and a lawn that need fresh watering every day. Rethink your electric bill if you placed more smart gadgets in your living room, bedroom, and garage. Note every expense and compute them every month. You might find out that what held true before you invested in your own living quarters may not be true afterward.
Expect increased rates
Second, expect that your maintenance costs will go higher. Your landlord used to take care of fixing the faulty wiring or the water leaks in your old apartment. In contrast to that, new homeowners now assume the costs and responsibility of proper home maintenance. The usual yearly upkeep costs anywhere from one to four percent of the total value of your property. Hence, a two-story house worth half a million dollars will entail $5,000 to $20,000 every year to ensure its longevity, functionality, structural ability, and aesthetic appearance
Be ready for property tax hikes
Another factor to anticipate is the rise of property taxes. The initial assessment real estate agents, brokers, or property development managers give new homeowners will change. Factors beyond your control like inflation or the next housing crisis can impact them. The notorious financial bubble that cost property costs to crash in 2010 triggered an increase in property taxes at a rate of almost 100 percent, compared to its rates in 2000. Protect yourself by undergoing financial re-evaluation every year.
Save for other home-related fees
Finally, always keep extra funding on hand if you do confirm that you have to pay more property-related expenses than you had forecasted. More than $300 a month for additional property taxes can be a safe fallback. In addition, new homeowners can allot another $1,000 a month for homeowner insurance fees.
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