Whether purchasing your first home, your “move-up” home, or downsizing, purchasing a home is a momentous occasion. The homebuying process can be a long, rocky road, and getting to the finish line usually involves a headache or two along the way! But when the closing is finished and you’ve received the keys, be sure to take some time to celebrate and then begin looking ahead. The joys of homeownership come with unexpected costs after closing if you’re not adequately prepared. 

Taxes & Insurance

Whether you’re part of the 80% of people who purchase their homes using a mortgage or pay cash, you’ll need to pay your annual property tax bill and homeowner’s insurance policy.

If you have a mortgage, there’s a good chance that a pro-rated portion for taxes and insurance is being collected as a part of your monthly payment, in addition to your principal and interest. Over the course of a year, they’ll place these pro-rated amounts into a separate, specific account called an escrow account, and pay both of these bills on your behalf when they come due. 

Some states, like South Carolina, offer a reduction in annual property taxes if you declare your home as a primary residence. However, this is usually not by default and usually requires a visit to the county assessor’s office to apply for legal residency. 

Your trip to the assessor’s office can save you you a lot of headache and heartache down the road, as the difference between the “owner-occupied” property tax rate, and the “secondary/investment” property tax rate is substantial, and could mean the difference between a bill being $1200 (owner-occupancy), or $4800 (non-owner occupant), a $200-300 additional monthly expense added onto your mortgage payment! 

It’s also important to know that, in most cases, while your principal and interest portion of your payment is fixed, property taxes and homeowner’s insurance costs fluctuate yearly. The year-over-year change is usually slight but rises much more frequently than it falls, so keeping some cushion in your monthly budget for these changes is always a good idea.  

Utilities

One of the most overlooked costs after closing on your new home can be utility costs. Even if the previous owner provided utility bills for review during your purchase process, each person (or family) lives differently in their home. 

Whether you’ve come from a rental situation where you had to pay only a few utilities (or none at all) or you’re relocating from another state, average monthly utility costs can vary widely from state to state and person to person.

Suppose your landlord used to cover certain monthly utilities. In that case, you may want to start your first few months of homeownership by paying extra attention to how comfortable of a temperature you set your thermostat to, or how long you enjoy your hot showers.

Some energy providers also have seasonal peak hours, during which electricity or gas is considerably more expensive to use at a set time each day (from 4 to 7 p.m. in the Spring months, for example). Check with your provider about this possibility BEFORE you discover a surprise on your monthly billing statement.

Home Maintenance

If you remember one thing about owning a home, it’s this: the little things can add up and become big things.

Whether it’s a leaky faucet, a strange noise coming from an appliance, or a tiny crack you notice around a door frame or window, a seemingly harmless issue can evolve into a budget-busting monster of a problem if they aren’t correctly addressed, or worse, ignored for long periods of time. A homeowner’s worst nightmare is a small leak that eventually destroys the integrity of the foundation in a bathroom, where the cost to remedy goes from a mere $100-$200 to a cost in the thousands to repair. 

Another good idea to help save yourself from unexpected costs after closing is to plan to enroll your heating & air system on an annual maintenance agreement with a licensed HVAC company, where it’ll be inspected regularly (usually in Spring & Fall) for any issues associated with regular aging and use. 

Trust in the Best for Your Real Estate Needs

When you work with The Lafayette Team, it’s our mission to ensure that there are no surprises you have to deal with alone when buying or selling a house! We’d love to partner with you on your home-buying journey.