If you are at the same time excited and terrified at the prospects of purchasing your first house, don’t worry, you are not the only one. This is probably the largest financial venture you will undertake so it is natural to be a bit nervous and to wish to research everything in detail so you can feel comfortable as much as possible. With that in mind, here is a list of certain expenses you need to keep in mind when you are planning the budget for your first home.
Prepare for the down payment
Everyone who has purchased a house, vehicle or other more expensive asset had to prepare for the down payment. It represents a portion of your new house’s price which is paid upfront and it can go up to 20 percent of that sum. For instance, if the house costs $200,000, the down payment would be $40,000 and if you saved up that amount, that means that you would have to acquire another $160,000 through a bank loan or some other financial scheme. Both your savings and the manner you would obtain the rest of the sum is something you need to plan for in advance to make sure you come up with the optimal solution when it comes to monthly installments and the length of the payment period.
Keep in mind the house insurance
Taking out home and contents insurance is a small pre-purchase step which could mean a lot in case something happens. One of the most important features you should pay attention to is the 24/7 assistance, while others that could be of use include temporary accommodation in case the damage is substantial and counseling after a traumatic event. The insurance costs vary varies from property to property, and you can click here for home and contents insurance reviews to get more familiar with the conditions and choose the option which would suit you the most. Some things you need to ensure your new home and belongings against are fire, earthquake, storm, flood, and make sure you read the small print and to know exactly what is covered by the insurance.
Anticipate building inspection costs
Since you are buying a house for the first time, you probably don’t have much experience with assessing the offer and there is a reasonable fear among many people when they start looking for the first property that they might overpay for a place. This is why building inspection is a perfect manner to check the structural soundness so you don’t pay too much for a house that is essentially better to be knocked down and built again. These inspections usually cost up to $600 which is not a big amount, considering that it gives you peace of mind regarding a long-term investment that is much larger.
Don’t forget the moving expenses
In all the commotion regarding finding the perfect place and arranging the finances to purchase it, many people forget about moving. Since your belongings won’t magically appear in your new home, you need to take it very seriously, as well as the incurred expenses. Besides a lot of hard work related to decluttering, organizing items and cleaning the place, you will need packing supplies and a truck or a moving crew to transfer your things to the new place. Also, some people go for moving insurance, just to make sure they are safe if anything gets broken or damaged during a move, which is not impossible, having in mind the amount of (semi)fragile belongings that you might have.
When you think you’ve found your dream house, before saying ‘I do’ to it, sit and think about all the expenses and plan your budget well so you can make sure that you having everything under control. That is the only manner you will be able to truly enjoy your new house and to consider it ‘home sweet home’.
There are many costs associated with owning a home, and first-time homebuyers often do not fully understand or budget for these costs. A home is likely the most expensive thing you will ever own, and repairs can be astronomically expensive. Even small maintenance items add up over time and can strain your budget. This guide will focus on four hidden costs to homeownership that homeowners need to budget for.
Closing Costs
When buying a home for the first time, many people forget about closing costs. Fortunately, as the buyer, you are not responsible for paying a commission to your real estate agent. However, there are fees associated with closing, and they can be substantial and varied. These fees include title fees, taxes, real estate attorney fees, inspections and survey fees, among others. There may also be additional documentation required, such as when your home is part of a homeowners association. This is all in addition to the purchase price of the home and any modifications or updates you want to have done. You can generally expect to pay two to five percent of the home’s purchase price in closing costs and will need to budget for this expense.
Property Taxes
Property taxes vary widely based on where you live. They are usually assessed by a local municipality, such as a county, and some areas have much higher property tax rates than others. It is also possible for a property to be taxed by multiple jurisdictions, such as when your property straddles the border between two counties. Before you buy a home anywhere, it is important to calculate what your property tax burden will be. Factor this number into the amount of home you can afford when looking to buy. Always stay updated on changes to legislation, which can strongly impact property taxes. Also remember that because the property tax amount is based on the value of your home, it can and does vary from year to year. In most cases, property taxes are due once a year, the date on which varies from state to state.
Insurance
Homeowner’s insurance is much more expensive than renter’s insurance and much more complicated. For example, buying an older home might actually increase your insurance costs because of older systems such as plumbing and heating which are more likely to catastrophically malfunction. You also need to consider special coverage if you live in an area that is prone to natural disasters not covered by normal homeowner’s insurance policies, such as a flood zone or an area prone to earthquakes. This isn’t insurance you can go without because the risks of getting caught without it are far too high.
Updates
Updates can increase the value of your home as well as additional features you want and will use. Updates can be as simple as painting or as complex as major renovations. It is important to come up with a plan for how you want your house to look and what costs will be associated with these updates. Look at average prices, such as swimming pool prices, to determine how much you might need to budget for each update and the associated maintenance and installation costs. To save money, you can do multiple updates over a length of time rather than all at once. You can also wait for good deals to come around so the updates will cost less overall. For example, decks, sunrooms, and patios are not as popular in the winter, so contractors often offer discounts to encourage people to buy. This benefits contractors because it means they don’t have to lay off workers in the offseason.
Homeownership is often an expensive undertaking and a major financial investment. Homeowners and homebuyers need to ask questions and fully understand all fees, taxes and maintenance costs they might be responsible for once they purchase a property. If you properly budget for these costs, however, they will not catch you unaware.
Entertaining guests in your home can be a superb method of meeting new people and getting to know them more intimately. Whether you’re entertaining coworkers or a group of friends from a local meet-and-greet, it’s crucial that you have the proper home options to lend to a fascinating evening. These home options are sure to provide hours of entertainment, taking the load off of your shoulders by not having to worry that your house guests are bored and ready to leave. While incorporating these options into your house can take time and money, they’re critical for families that host often.
Home Theater
Putting a pint-sized movie theater in your home is a great way to watch movies and television on the big screen, lending to an evening full of enjoyable entertainment. When setting up the home theater, you should pick out comfortable theater seats that are spacious and provide superior comfort. Add enough seating for the whole group of guests, preventing anyone from having to sit on a hard chair or the floor.
Wet Bar
Alcohol is always a great entertainment component of parties and get-togethers. Instead of just buying a bottle of wine and calling it a day, try setting up a wet bar in the most popular spot in the home. This allows guests to make their own drinks, having full access to a wide variety of alcohol, additives and mixes. If you’re looking to bring a little more variety to the bar, adding a slush machine or an ice shaver is a great way to give your patrons some extra choices while creating a more formal environment.
Pool Table and Arcade Games
Buying a pool table and putting it in any room of the home is a sure way to provide a fun night to your guests. Arcade games and pinball machines can be cheaper than you think, increasing the entertainment facet of your home. Be sure to have a variety of sticks and mounts so that multiple people can play.
Hot Tub
Purchasing a hot tub does not have to be expensive, as stores have a range of inflatable tubs that are easy on the budget and just as advantageous. Hot tubs are great for parties because they allow guests to mingle, talk and laugh while relaxing in a pool of calming bubbles. Add in the alcohol from the wet bar and you have a spot people won’t want to leave.
Buffet-Style Kitchen Area
While this may not necessarily be an entertainment element, a buffet-style kitchen area allows for a more enjoyable dining experience in your home. Set out hot plates, put plenty of dishes on the island and let your guests indulge. Try adding a fondue station so guests can dip cheeses, strawberries, breads and bananas into delicious melted chocolate or cheese.
Surround Sound Music System
They say music is the life of the party and without it, you just have dull, dreary conversation. Don’t just add music to the space by blaring your iPod. Install a surround sound system and connect your device to it. You’d be amazed at how effervescent good quality music can sound from the right speakers.
Outdoor Fireplace and Seating
You don’t have to spend a lot of money to spruce up your outdoor living space. A homemade fire pit works just as well as the expensive in-wall fireplaces you’ve seen in the past. Add in plenty of comfortable seating and you have a soothing outdoor entertainment spot perfect for guests of any age.
Keeping your guests entertained not only makes you feel better as a host or hostess, but it encourages them to want to come back. If their experience in your home was boring and dull, they’re not going to want to come back no matter how much they like you. Adding these entertaining home options to your property does not have to cost thousands of dollars or take months of your time. For example, you can buy a pool table second hand or build your own wet bar from scratch without getting a contractor involved. You might even find that these small changes make the home more fun for you and your family when guests aren’t there while increasing the value of your house investment.
One of the more common ways to build wealth over time is owning a home. As owners pay down the mortgage, they are able to build up equity. Should they decide to sell the home, they can then tap this equity. The homeownership rate in the US was 63.8 percent in October 2016. While this was down from what it was a few years ago, this statistic shows that owning a home is still a popular way to build wealth.
It’s recommended that prospective buyers save up 20 percent of the home’s value as a down payment. This will allow the buyer to avoid private mortgage insurance, which can be quite expensive and only protects the lender. FHA loans only require a 3.5 percent down payment, and loans via the USDA or the VA require no money down. If you’re not in a rural area or a veteran, here are some ways to build up the down payment that’s necessary to buy a new home.
Live In Affordable Accommodations
When it comes to the biggest expenses that most people will have on a monthly basis, the cost of lodging will usually come up near the top of the list. The average cost of rent in the United States is $1,231 a month. That’s more than a quarter of the median family income. The best way to save money on rent is to find a place to live that’s on the low side of the local market rate. While there won’t be as many amenities in cheap apartments or homes, the money that’s not spent in the way of housing can go toward savings.
Just getting a cheap apartment is not the only way to save money toward a down payment. Getting a roommate can also help cut the cost of rent and free up even more cash flow for savings. For example, a three-bedroom apartment or house that costs the median of $1,200 could cost only $400 a month if one person rented out each bedroom. Put in some twin beds, and the cost could be lower. Even a married couple could rent out a room or two to save on costs. Every dollar saved on rent can then go toward saving up for a future down payment.
Cut Other Expenses
Americans are notorious for spending more money than they need to. Whether it’s a daily latte or cable television, people in the US confuse wants and needs. Basic food, lodging, clothing and transportation are necessary to live and have a job. Most everything else is a want, and there are ways to cut down on these expenses. For example, it’s not necessary to have a super expensive cell plan with unlimited data. There are prepaid options that are pretty cheap. Additionally, it’s possible to cut down on eating out or save some money by opting for Netflix or Hulu rather than an expensive cable package with every pay channel known to man. Every dollar saved from cutting out unnecessary expenses can then go toward a down payment.
Get A Side Hustle
Sometimes, one job just doesn’t pay enough to save much. This is where a side hustle can come in quite handy. There are entire online communities that are dedicated to helping people find side hustles that can bring in extra income. Every dollar earned in excess of basic living expenses can go toward the down payment. Those who can keep up the side hustle after signing off on a mortgage can even accelerate the time needed to pay off the loan.
Regardless of whether a person thinks a down payment for a new home is in the cards, there are steps that he or she can take to build up some savings. It will take time, and it’s a good idea to save up for closing costs and a deductible for home insurance claims. However, over time, building up savings for a down payment can be done by taking positive steps toward the goal.
First came computers; they were followed quickly by the internet, and soon we found ourselves in an age of handheld devices, touch screens, and motion sensors. With all of this, it was only a natural development that another byproduct of modern technology would be increasingly automated homes. From always on voice-activated devices, to remote controlled appliances, lighting and temperature control, and home theaters (see Argenta) that are better than the real thing, home automation is certainly our future.
So how do you prepare for a world of home automation? How do you make sure that you are best placed to embrace the newest developments in home tech—most of which we don’t even know about yet? Here are a few tips to get you on your way.
Research
The best way to prepare for the future is to know what is coming. Keep one eye on tech publications, reading as much as you can about the things that are currently in concept or development phase. If you are able to, try to visit various conferences and trade shows such as CES to see what kinds of things are out there. If you cannot make it to these, there is considerable coverage to be found online. If you know which things are coming up, you can know which you want to buy, and which to hold off on to wait for a better version.
Don’t Adopt New Tech Too Early
Which leads us to our next tip—be discerning about which tech items you take on early on. In the age of instant information and social media bragging, the idea of becoming an “early adopter” can seem very tempting. But sometimes it is not the best way to go. Many new technologies need awhile to iron out the kinks and problems, and if it is something that has little or no precedent, it will be likely to face at least a few of these. Furthermore, newer cheaper or more efficient versions are likely to start cropping up in the second wave, and with home automation, you are looking at a lot of money to replace something just a few months later. So while some things you can take the risk on, it is often worth waiting awhile before incorporating the very newest of the new home technology.
Start Saving
In order to fully take advantage of the latest home tech features, you are going to have to spend some money. For this reason, you will probably want to start saving right now. Things like theaters are expensive, but when you have a saving plan, you should be able to find something in your price range.
Make Home Preparations
You might also want to design your home interior with home automation in the back of your mind. Older houses are a lot trickier to fit home automation seamlessly into, and that is because newer home layouts are often designed with modern technology taken into consideration. If you are building your own home, it will be easy to incorporate technology, but even if you already have a home, there are ways to make sure that you can accommodate new home tech. Work with interior designers and architects to better figure it out.
Embrace it
The future is coming, and resisting it will not prevent it. Homes of the future are going to be more tech driven and user-friendly than they have ever been. Rather than fearing future home technology developments, embrace the greater ease and comfort that will come from them, and jump on it early—the future is ours for the taking!
