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Purchasing a new home is an exciting and life-changing event. While you likely know that you'll need to be able to afford to pay your mortgage each month, there might be other expenses that you aren't as familiar with.
1. Maintenance Costs
It makes sense that you'd need to include money to address the inevitable maintenance costs that a home requires. After all, you probably perform routine maintenance on your car if you own one.
For many people, though, the fact that home maintenance occurs so often and that it takes a sizable amount of money is a surprise. A good rule of them is to plan on spending one to two percent of your home's value in maintenance costs every year.
Whether you've never had to contend with utility bills directly before or you're moving from an apartment or condo into the larger space a home provides, your monthly costs for heating, cooling, natural gas and the like could come as a shock. There's a huge discrepancy between costs according to where you live as well.
Expect to pay more for utilities in large metro areas like New York, Los Angeles and Chicago, for example. Homes in southern states that don't have much of a range in temperatures will likely cost you less in utilities.
3. Property Taxes
Property taxes are another expense that can span a huge range depending on where you live, the state of the economy and the size of the dwelling. Property taxes can fluctuate frequently when the municipality where your home is located reassesses the homes.
4. Homeowners Insurance
Homeowners insurance is a must for your home if you are getting a mortgage to pay it off. Even if you are fortunate enough to have the cash to purchase the home in full, opting for homeowners insurance is still a smart move.
Homeowners insurance that offers you the replacement cost of items that are damaged in a fire or stolen provides you with a better deal. When shopping around for homeowners insurance, ask about any discounts you might qualify for. For example, you might try bundling your vehicle and homeowners insurance together for a discounted rate.
Plan ahead by exploring what these five expenses could mean for your budget after you become a homeowner. Setting aside a small amount each month can keep them from making such a big dent in your wallet.