Nearly every first time home buyer, and some veteran home buyers, know little about the unknown costs of owning a home. When people rent their home or an apartment, they have the luxury of not needing to regard any of the annual maintenance that occurs on the property.
No matter what the cost of a home is or the square footage, there will always be expenses that arise from time to time. If you have not planned ahead for those unknowns, then they could break the bank and cause financial heartache because they will always occur at the most inopportune time.
Recently my wife and I purchased a home and less than two months after we moved in I had to replace the water heater. Many of you are “do-it-yourselfers” like I am and have skills or the plumbing background to install a water heater, but there is still the expense of the heater, supplies, and disposal. I spent over $900 on the heater itself, and in total I have close to a thousand in final installation costs.
Homeowners need to be aware that some repairs don’t take a vacation. I always recommend that each family plan to spend 1% of the value of the home on annual maintenance and upkeep items. Whether it is buying that first lawn mower or snow blower, or like me, installing a new water heater, surprises will occur. If you budget for those expenses each year, your home will continue to be maintained very well.
Sometimes you are able to put off a repair, it is called deferred maintenance. If you are unable to afford the fixes and deferred maintenance begins to pile up, then the value of your home could be compromised and begin to go down. We have all seen those properties around town that are in terrible shape and are visually seen as dilapidated. The only reason those have gotten that way is because the homeowner has failed to invest a minimum of 1% annually into ongoing maintenance.
If getting into the home is taking every penny that you have, then it may be smart to hold off on buying until you get your future home’s maintenance account fully funded.
Another mistake that I see is that buyers don’t plan for the expense of furnishing the home. One of the worst things a buyer can do is close on the sale of a beautiful home, and not be able to afford to nicely furnish it. There are always those no interest financing options at furniture stores, but please don’t use those types of credit accounts! I am still trying to understand why someone would want to “finance” a couch or a bed for five or ten years. Those choices don’t help anyone financially except the furniture salesperson.
Planning ahead is the best solution to that scenario. It is not very well known, but you could easily spend $30,000 for every 1000 square feet to finely furnish a new home. Take a quick minute and think about that. If you stepped into a home with absolutely nothing, there are hundreds of things you would need to buy from flat ware , dishes, cleaning supplies, wall hangings, curtains or blinds, in addition to the furniture. For quality items that will last a lifetime, it will cost you about that amount. Depending on your personality and expectations, you will need to prepare for those expenses.
The purchase of a home is just the beginning, so proper financial preparation is very important as a homeowner.