New homeowners: don't forget these hidden costs
November 11, 2016
Save a little for home repairs if you can.
Becoming a homeowner for the first time can be a daunting, not to mention expensive, endeavor for most. Of course, there's also a great sense of relief and accomplishment once you've found the perfect home and have inked the deal. While the down payment, closing costs and mortgage expenses are all top of mind, new homeowners might underestimate just how much they need to save up for various other “hidden" costs. While these expenses aren't intentionally obscured or hard to predict, they can still represent substantial costs that don't always receive enough attention from first-time buyers.
This relatively small expense is nonetheless an important one for buyers to consider. Even though some states or lenders may require a home insurance policy, that doesn't mean it's wise to simply purchase the cheapest or most convenient one. And as the Insurance Information Institute pointed out, new owners may be surprised what is and is not covered under a typical policy. Be sure to set aside some time to research the best policy for your budget and needs before pulling the trigger, as this can prevent major headaches in the future.
Perhaps the costs that are truly hidden, and most difficult to assess, are those related to repairs. Even brand new homes could have small defects that don't present themselves for a period of time, like tree roots impacting underground plumbing. Or maybe certain features of the home, like the color of the paint or the design of the garage door, just don't suit your tastes.
"It's never a bad idea to save a little extra cash for future home fixes.”
No matter the exact reason, as a homeowner, repairs are basically a certainty, and that requires a budget to be prepared for anything. Nerdwallet suggested hiring a home inspector to get a professional opinion of a home, even after you buy it, to get a better sense of repairs that may be needed and how much they will cost.
Without a professional opinion, it's still possible to plan effectively for repair costs. According to sources who spoke to Nerdwallet, most homeowners should expect to spend up to 2 percent of their home's value on repairs per year. The most obvious way to save these funds is to make regular contributions to a savings account, but some homeowners might also consider a home equity line of credit.
No matter how you go about saving for your home, there's no question that this extra cash will come in handy sooner or later.