What You Need To Know About First- and Second-Year Home Expenses

Housing Finances What You Need To Know About First- and Second-Year Home Expenses

My husband and I were so excited to buy our house. We’d been renting since college and were eager to have our own place. Finally, no one could tell us how many dogs we could have or how many posters we could hang up.

Once we moved into our home, we quickly realized how much we didn’t know. We didn’t know how to make basic repairs or know what kind of contractor to call.

We also didn’t know how expensive home buying could be. Even now that we’ve been in our house for a year, we’re still surprised at how much mundane items can cost.

Read below to see what we learned and how to prepare yourself.

Service and Maintenance

Buying a home is easy. Maintaining it is another story.

Owning a house is like having a car. It’s one thing to drive it regularly, but if you don’t get an oil change or pay attention to weird noises, your car will die.

A house has a similar maintenance schedule, though it’s more involved. You need to change out the HVAC filters, add salt to the water softener, clean out the gutters and more.

If you’re handy or have an interest in home repair, these tasks aren’t complicated. But some do require professional help and many have an added cost.

Create a budget for regular home maintenance tasks and save money for it in a sinking fund. This should be separate from other major repairs, like replacing a roof or buying a new air conditioner.

Some contractors have a monthly service plan you can buy that will take care of these basic tasks without you having to think of them.

Landscaping

When my husband and I first moved into our house, we didn’t think too hard about the landscaping. We had to replace most of the electrical wiring inside the house, which was a week’s worth of work.

After that was over, we were more concerned about the interior, and it took us a while to paint, put wallpaper down and hang up all our pictures.

It was only until spring came that we realized we didn’t like our landscaping.

Most of my friends have had a similar trajectory. It’s normal to care about the inside of the house first, especially if you have to renovate. It’s only until you’re there for a year or more that you start to think about landscaping.

Landscaping costs have a huge range, depending on what you want done. Do you want to completely start over, with new plants, bushes and trees? Or do you just want to clean up and the edges and build some raised beds?

You can hire a professional landscape designer or pick out the plants yourself. According to Homeadvisor, average costs range between $1,410 and $5,296.

Security System

I knew when we moved in that I wanted to get a security system. I grew up having one and it always made me feel more secure.

Our real estate agent recommended a company that offered free installation and would cost $50 a month. That adds up to $600 a year. That doesn’t sound like much to pay for safety, but it was just one more expense that I hadn’t budgeted for.

Instead of buying a traditional security system, we purchased SimpliSafe. Our total package was only $225.  We also decided to opt for self-monitoring so we wouldn’t pay a monthly fee.

If you want a security system, do research about what’s available and what would make you feel safe. You might be surprised at the monthly cost.

How to Budget for First-Year Homeowner Expenses

The best way to budget for homeowner expenses, whether it’s your first year or your 30th, is to save a little bit at a time. Saving $2,000 for a new air conditioner seems lofty, until you break it down in small chunks.

A basic rule of thumb is to save 1% of the total sale price every year. If you bought a $200,000 house, you’d save $2,000 a year or $166.67 a month. I like to increase that amount because I also want to remodel the house some day.

Those costs are for repairs and maintenance work. If you want to save for extras, like new kitchen cabinets or a finished basement, you should create a separate budget. That figure depends on what you want and how quickly you want it.

How to Save on First-Year Homeowner Expenses

Any time we have a home problem we can’t solve, we always call two or three contractors to give us a quote. Finding multiple contractors is a pain, especially if it’s during a busy season.

But getting multiple quotes is necessary. If you only get one quote, you don’t know if you’re getting ripped off or if you found a great deal.

The other day, we needed to reroute a drain in our front yard. I called two plumbers. One of them quoted $1,650 for the job and the other quoted $6,500. I couldn’t believe the price difference. I’d used the second plumber before for a small job, and had only heard good things. If I hadn’t gotten two quotes, I might’ve overpaid by almost $5,000.

I’ve had this happen almost every time we needed a contractor. And every time, I’m reminded why multiple quotes are a necessity.

For those of us without an infinite budget, finding the best contractor at the best price is key.

It also helps if you can do some of the work yourself. Before calling a professional, see if you can at least figure out what the problem is. A few months ago, our garbage disposal stopped working.

I was so annoyed. We’d already had a plumber come out that week and I didn’t want to pay another $100. I looked up videos on YouTube on how to fix your garbage disposal. Not only did we already have the tool I needed, but it only took five minutes of work to fix it.

 

Comments (9) Leave your comment

  1. Wow it seems that all of these costs are maintenance costs, which I knew can exist, but did not know how expensive it can get. I am thinking of buying a 2 or a 3-flats in the fall, live in one unit and rent the other. I should then be prepared for these costs. Thanks for the article!

    1. Hi Joel! If you’re ever in Texas near Dallas or surrounding areas give me a call so I can help you get a great deal on some properties! I’m a Realtor out this way! You are thinking smart!

  2. I’m surprised homeowners insurance isn’t mentioned. For me I have a $900 annual cost and any service that is covered would cost $75. I have been living in my home for only three years and have used it multiple times. I haven’t added up the cost of the services with what I paid. But I do like the convenience of not needing to call different shops to get quotes. Haven’t had an issue with any of the service technicians they have sent out so far

  3. Don’t forget to add in property tax hikes so you need to do your homework on tax grievances, which saves $$$. Also there are always grouting and caulking, plus appliances that require fixes here and there, it all adds up! For many these days, outsourcing is an option if you don’t want to mow the lawn or clear the mountain of snow! Definitely need to budget for these.

  4. for those that live in an appreciating area, expect to pay a higher mortgage or lump sum to offset higher taxes in escrow. said another way, the tax benefit you receive for owning your home will be significantly diminished or spent entirely when taxes on your home go up every year. in just 2 years, my mortgage went up $200 per month. living beneath your means will mitigate the impact, but for those that are stretched, it may be a significant problem.

  5. Another biggie to save up for is a new roof. Usually a part of an inspection so a new owner is aware, and often covered under insurance if it is damaged by something like a hail storm. But when buying an older home, be sure to keep that one in mind. They are not cheap! On a positive note, also keep in mind the PMI generally only applies if you have less than 20% equity on the property. If you can can come up with a good down payment, or pay off the loan to over whatever the PMI threshold is, that’s a few more bucks in your pocket! And remember to ask to drop the PMI from your monthly payments once you get above that line. Sometimes that does not happen automatically.

  6. Leafguard costs us $12,500 in the first year of ownership after all said and down just after buying a remodeled house in the winter and inspector not looking at the level of the gutters. Water was pooring over and hitting the foundations. Caused some fascia damage. But now almost no to very low maintenance on gutters with lifetime guarantee.

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