Many first-time buyers may be surprised by the other financial responsibilities that come with a home outside of their monthly mortgage payment. Although they may initially budget for just their mortgage amount each month, it’s also important to put some money aside to cover other home-related expenses as well. While some expenses may be predictable—like the monthly HOA fee—other expenses may come out of the blue—like a supplemental tax bill or roof repair. Here are five common expenses that many homeowners face.
1. Supplemental taxes: Many homebuyers are surprised to receive a supplemental tax bill in the mail. Supplemental tax bills are sent when a property changes hands or when there’s new construction that requires the Assessor to reappraise the home. If the property appraises for more than its prior value, the new homeowners will receive a bill for the difference; if it appraises for less, the homeowners will receive a refund. Although regular property taxes are often rolled into the monthly mortgage payment, receiving a supplemental tax bill can be confusing to many homeowners, especially first-time homeowners. Prepare them for it ahead of time and suggest that they put some money aside to cover the difference.
2. Insurance: Insurance is important to protect the large investment of a home. While homeowner’s insurance covers the house and objects in it, hazard insurance covers the home should damage occur during an earthquake or severe weather event.
3. Monthly Co-op or Homeowners Association Fees: For homeowners who have moved into a subdivision, gated community or condominium, Co-op or HOA fees help keep the neighborhood amenities in top shape. These fees cover everything from the community pool to the security or door person.
4. Unexpected maintenance: Regardless of the age of a home, there will come a time where something will leak, clog or break. Putting money aside to cover the repair and maintenance of appliances and heating/cooling systems will ensure that they’ll continue to run for a long time.
5. Outdoor maintenance: Keeping the exterior of a home in top shape is not only important for curb appeal, it may also help you keep costly repairs at bay. This includes landscaping and yard maintenance, painting, pool maintenance and tree trimming. Whether the homeowners plan to do most of this maintenance themselves or hire someone to do it for them, it’s helpful to put some money aside to ensure that this ongoing work doesn’t go by the wayside.