First-time home buyers know that buying your own home, while an excellent investment and cheaper than renting in the long term, is a financially daunting process.
Keep in mind that unlike renting, this money is going somewhere solid, and is ultimately, money well spent.
The moneysmart Community has dealt with some of the unforeseen costs involved in buying a property – in this article we deal with what comes after the sale.
There are a number of devilish details that rear their little heads once the sale is through and the family is ready to move in. If you know what they are before you can budget adequately for them and the first few months in your new home will be all the easier for it.
Rates and Taxes
According to Bill Rawson of Rawson Properties, most first-time home buyers purchase a home without even asking about what to expect in municipal rates and taxes.
These costs, especially on higher value properties, can be a serious monthly expense. It’s also important to bear in mind that valuations do not remain constant.
If improvements have been done on the house just before or just after selling, this could well push up the property valuation, and thus the rates and taxes. Rawson says this increase could easily be around 20% to 30%.
Naturally you want your family to be safe once you’re settled and living in your new house.
Moving into a new home is a relatively public affair and anyone who was on the street at the time no doubt saw the moving trucks coming and going, and quite possibly the contents of the home passing across the garden.
If you’re lucky the previous owners will already have a good security system installed, but you’ll still have to pay to activate that system and of course the monthly security fee.
It’s also wise to check any burglar bars on windows or easy access points around the property. Particularly if your property has been standing empty for a while, replacing rusted burglar bars may seem like an annoying expense but it’s substantially cheaper than replacing the contents of your home.
Accidents can and do happen. When it comes to insuring your home, it’s better to insure it at market value, rather than the replacement value.
After a few years of owning a property, it’s a good idea for the owner to get the bank or an independent valuer to reassess the insurance value of the home and make sure you’re insured accordingly.
In a perfect world, all first-time home buyers would have a full knowledge of all the quirks and issues in the home that need fixing, and thus be able to budget accordingly.
This doesn’t always happen and a bit of money and time should be put aside for the unforeseen.
As a rule of thumb assume that renovations will always take longer than anticipated– it may rain, contractors fall ill, unforeseen problems are encountered and work gets delayed.
If you’re emotionally prepared for that before it even begins, it will not be as stressful. So too with funding your renovations, budget to do the most critical work first and keep some money aside for suprises.
The fewer surprises that lie in store for you in your new home, the more enjoyable the moving experience will be.
It’s in your best interest to know what you’re getting yourself into.
When it comes to making what will quite possibly be the biggest investment of your life, it’s highly recommended that you adopt the boy scouts code and “Be Prepared.”[gravityform id=”8″ name=”Home Loan”]