Whether you're buying your first abode or expanding your current home, there are the obvious expenses that come with it. Whether it's the mortgage, property taxes, or homeowners insurance, everyone should have a pretty clear picture upfront of what it's going to entail before signing on the dotted line. But the same is not always true for the many other costs homeowners incur. Whether it's the big repairs or the utility costs, they are often overlooked or ignored. And, don't forget the rising costs of any household expense.
Before you look for a mortgage for your new place or take the steps to refinance and expand your home sweet home, there are a number of additional expenses to consider, before you blow your budget and put an unexpected dent in your savings.
Repairing or replacing heating and air conditioning systems can be one of the biggest expenses that a homeowner might have. So, listen up when the home inspector talks to you about the condition of your new home-to-be. Get a realistic assessment of the life span of any heating and cooling systems in the home.
It usually pays to have such things as your furnace or central air conditioning system under warranty. The more expensive the item, the more the warranty or service contract makes sense. You might be able to get a service contract from your oil or gas and electric company or from the company that installed it. Get the details of the contract and find out the costs.
Most service contracts do not cover every part that might need to be replaced. So, find out what isn't covered. Ask whether or not a free annual cleaning or checkup of a heating system, commonly known as winterizing, is included in the contract.
You should know that, similar to any other service contract, there's usually a penalty if you cancel early. If your home had a service contract on it when you moved in, find out what's covered and what's not before you shop for any other warranties.
New homeowners often forget that upkeep on a home can be expensive. There will always be unexpected repairs. One of the other biggest expenses can be replacing or repairing a roof. Ask the previous homeowners when it was last replaced or repaired. When the inspector is giving you the lowdown on your house, ask as many questions as you can about the life expectancy of the roof, as well as any other structural items in the home, such as plumbing and electrical systems. But be realistic. Even with a home that's in decent shape or even if you're in a brand new home, it's very likely you'll have to call a plumber or electrician a number of times when you own your house.
If you're new to the area, try to get recommendations for repairmen from neighbors. Also, get a good clear picture of the life expectancy of the various appliances in the home. If the items are very new, maybe you'll be safe from repairs for quite some time. If your refrigerator and oven look like they've been in the home since the 1970s, it might be time to invest in new ones. The repair and energy costs just may outweigh the costs of buying the new appliances.
Not only are there other costs to consider, but also keep in mind that most of those expenses are sure to increase year to year.
Property taxes rise, and depending on where you live, they can go up substantially in a few years. So, plan your budget accordingly and take this into account so you can budget for the jump. It's possible to do some "guestimating" about the property tax hike to come. Be aware of any proposed property tax increases in your town or city by staying up on local news. It pays to be a smart homeowner.
You can also look at the tax history for any home. Track the changes in home prices for a comparable house in your area, since home values also impact property tax fluctuations up and down. This data is easy to access online.
Utility costs are on the upswing. Adding an extra blanket or throwing on a sweater and turning back the thermostat is a wise idea for everyone. But just what else can you do to slow the costs of increasing energy bills?
If you use oil for heat, the price can be overwhelming. So it makes sense to shop around for a better deal. Look for reputable suppliers. Find out the terms of the deal and the implications of locking in a rate.
If you're finding it hard to find oil suppliers and repairmen, and it's time to replace your furnace, you might consider putting in a new gas furnace. Do your homework to learn whether the additional costs of putting in a different type of heating system will pay in the long run. If you're planning to be in the home for a while, that might make sense. If you know you're likely to move again in five years or so, then it might be wise to tackle another home improvement.
If you're in a state where gas and electric is deregulated, stop ignoring the ads and phone calls for a new gas and electric supplier. Check with your state's Board of Public Utilities to find reputable gas and electric companies, and do some research on their rates as compared to your current company. Find out if a low rate is too good to be true. If you're able to lock in a rate for a time, make sure to ask what happens to the rate after the contract expires. Also, if you cancel before the lock-in rate expires, you need to know what you might be obligated to pay.
There may be other ways to even out your expected gas and electric bills. Many utility companies offer a "balanced" payment plan. It won't save you money, but it will give you a set amount to budget for every month. Basically, the utility company averages your energy costs over the prior 12-month period, so you pay the same amount each month. The company monitors your energy expenses, and if there's a jump up or down in the actual amount on the meter, changes can be made to the monthly payment to ensure your average is on target.
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