With homeownership, there are both benefits and costs involved (not just the down payment).
As the homeowner, your financial responsibilities extend beyond the down payment and monthly mortgage payments; there will be maintenance items to maintain and pay for, yearly tax bills, and the unexpected repairs to resolve. CNN Money does have a few money tips to help those would-be and already-are homeowners; read their article here.
1. Create a new budget
Instead of rent, you now have house expenditures. Besides the change in the monthly payment, there will likely be an increase in utility bills (it costs more to cool and heat and power a larger living space!), the potential watering and maintenance of a yard and garden, and other things such as a trash bill and your tax bills.
Estimate your monthly expenses initially, but then keep track of the actual monthly money going out for awhile, and then base your budget on that.
2. Plan on repairs
Even with a turn-key property, most likely you will have repairs to make pretty soon down the road. “Most homeowners spend 1% to 4% of their homes’ value each year on repairs and maintenance.” (CNN Money. “4 money tips for new homeowners”). And if you have an expensive repair coming up, like replacing the roof, try to save a little more each month in preparation.
3. Expect your property taxes to go up
Property taxes start out based on the assessed value of your home at the time of purchase. But,
Property taxes have a tendency to rise, even when home values drop. Back in 2000, localities across the U.S. collected an estimated $247 billion in property taxes, but by 2010, that number almost doubled to $476 billion despite the decline in home prices from the infamous housing bubble implosion. (CNN Money. “4 money tips for new homeowners”)
4. Expect big payments
Homeowner’s insurance and property taxes are some hefty bills, that you should plan for accordingly.
Read up on all of CNN Money’s tips here: “4 money tips for new homeowners”