Buying a new home is a significant and exciting life decision and process. It may seem that once you’ve submitted your down payment, you can begin to see the light at the end of the purchasing tunnel. However, there’s more to homeownership than making your monthly mortgage payments.
Learning about other costs you may encounter, common homebuyer mistakes and potential payment assistance programs can ensure you have all the tools you need in your home-buying toolkit. MoneyGeek's guide walks you through the new homeowner's checklist to help make your purchasing process as smooth as possible.
What You Have to Do as a New Homeowner
Many people focus on whether to rent or buy a house for a while before deciding on one option. When choosing to purchase your first home, there are various factors you need to consider — and they go beyond coming up with the down payment.
After you complete the closing process, you must think of many things. These may include updating your address, changing the locks and ensuring your house is clean before you move in.
Things to Do After You Buy a House
Owning a home requires a lot of effort. Some of it begins as soon as you purchase your home. These include checking your security system and preparing it for your move-in date.
Then others last well beyond after you and your family have settled in. After all, you will need to maintain your home.
MoneyGeek's guide highlights several must-do steps in your new homeowner's checklist. Ensuring these are in place can make your move more efficient.
Secure crucial documents
You wouldn't want to misplace some paperwork, whether it's your mortgage agreement, inspection reports, insurance documents or birth certificates. Setting up your house and moving is hectic, so you're likely to lose them with all the hustle and bustle of moving in. Look for a location where you can safely store them. Better yet, purchase a fire-proof safe that can serve your purpose for the long term.
Change your address
Let people, establishments and agencies know that you've moved. It ensures you'll continue to receive your mail, and your credentials will contain updated information.
Get to know the lay of the land
Now is the time to go around your property and check out every nook and cranny. It's not just about knowing where the kitchen is or which door leads to the basement. You need to know where your main circuit breaker and water shut-off valve are. Doing this also serves as an inspection of your home's condition.
Do a deep clean
It's always best to scrub everything down, even if your agent tells you that the construction company or previous owners already did it. Check the kitchen, bathrooms, backyard and gutter and ensure everything is in proper order.
Refresh the paint and floors
Depending on your home's condition, you may need to repaint the walls and fix some floor panels. It's better to do it now while the house is still empty. Once your belongings are inside, it'll take more work.
Install your utilities
Ensure the basics are in place: You have running water, electricity, and gas. In this day and age, you must also schedule your internet installation.
Change your locks
Yes, your agent will give you all copies of the house keys. But you never know whether there are others out there. Your safety is a priority, so invest in new locks and have these installed.
Annual Maintenance Checklist
Unless something dire happens, you're unlikely to change door locks even after several years. However, there are some things that, as a homeowner, you would want to check at least once a year.
Like all things, your home will need maintenance — it is subject to wear and tear. You'll find small fixer-uppers here and there, but it usually costs you less if you spot them early.
Test your alarms and detectors
It's crucial to ensure that your fire and burglar alarms and smoke detectors are working. Most of these operate on batteries and you'll eventually need to replace them.
Prune tree branches
Trim tree branches so that they’re not close to your home. Not only will this prevent animals from entering your home, but it also helps you avoid heavy damage during severe weather conditions.
Inspect your roof
Unlike other parts of your home, like the garage or the yard, your roof isn't something you look at closely often. However, it's best to check if any shingles are missing, cracked or need replacing.
Check for termites
Whether you notice wood damage or not, it's best to ensure you don't have termites. The worst thing that could happen is you find out too late. An infestation may already be well underway and could be challenging to manage.
Getting Your Mail Delivered to Your New Home
Sometimes, we take for granted that people know where we live. You only realize you need to notify multiple people, providers and agencies about your change of address when you're moving.
The following are some of the top essentials to update:
- The Post Office should be your first stop. Visit a USPS branch or set up a forwarding address online, so they'll automatically deliver your mail to your new address.
- Government agencies like the IRS, Social Security Administration and Veteran Affairs, among others.
- Providers for utilities and insurance.
- Banks and other financial institutions.
- Memberships and subscriptions (like streaming services).
The True Costs of Homeownership
The median sale price for houses is $454,900 as of the end of Q3 2022. Without question, purchasing a home requires thought because it will impact your finances significantly.
However, there's more to it than applying for a mortgage and coming up with the down payment. First-time homebuyers usually experience financial stress because they aren't aware of the hidden costs of owning a home.
To help you avoid this, we've broken these down into purchasing expenses and monthly costs. We also explored those connected to maintenance, home repairs and remodeling.
Home Buying Costs
Homeownership costs begin with one-time expenses. As the name implies, these are expenditures that you only encounter once. After paying for these, you usually only experience them again if you purchase or move into another house.
Types of Cost
How Much Does It Cost?
What Is It For?
This is typically 3–20% of the selling
The down payment is a payment
The amount you spend on closing
Closing costs cover all the fees your
Anywhere between $1,128–9,060,
You can move all your belongings
Make Moving Costs More Manageable
There are many upfront expenses when you purchase a home, especially when it involves moving from one location to another. Many new homeowners look for tips to help them reduce these. Here are some strategies to consider:
- Declutter: Do you need to bring everything you have now to your new home? The fewer things you need to transport, the more affordable moving services become.
- Compare moving companies: Movers charge different rates, so getting estimates from several before deciding which one to use before deciding on one.
- Schedule your move on off-peak seasons: Rates usually drop between May to September, so if you can time your purchase around that time, you may spend less on moving costs.
It's easy to think you can rest easy once you've moved in. However, there are monthly expenses that you must consider. Remember, you'll have to spend on these as long as you live in this house. That means you must ensure you build it into your household budget.
Types of Cost
How Much Does It Cost?
What Is It For?
Your monthly payment depends on
Your mortgage payment is applied
Homeowner insurance costs an
Whether it's homeowners, flood or
The cost of utilities varies, but two
Water, electricity, gas and sewer are
The tax rate for each county is
You will need to pay property tax as
Manage Your Monthly Mortgage Payment
Some costs require attention each month. One of these is your monthly payment for your mortgage. MoneyGeek's financial tips for new homeowners can help you better manage it.
- Put in a higher down payment: A higher down payment reduces the amount you have to borrow. In turn, a smaller loan amount results in more affordable mortgage payments.
- Establish a household budget: Understanding your spending habits can help you determine which areas that require adjusting. Remember, your mortgage is one of your primary monthly payments, so ensure you have enough set aside.
- Set up automatic payments: Missed or late payments often result in penalties and fees, which add to your expenses. It also pulls your credit score down, affecting other financial areas, such as insurance premiums.
Everything undergoes wear and tear, including your home. Remember, you don't need something to break down before paying attention to it. Investing in maintenance is an excellent strategy to avoid more expenses. To be safe, set aside 1–4% of your home's value each year for maintenance costs.
Types of Cost
How Much Does It Cost?
What Is It For?
Expect to spend between $200–400
Deep cleaning goes beyond wiping
Ensuring your home remains pest
Whether you need lice removal or
It's best to keep your lawn from
A well-manicured lawn adds to your
Not everyone has a pool in their
A pool is a luxury that comes with
Financial Tips for New Homeowners to Reduce Maintenance Costs
They always say prevention is better than cure. This applies to your home, too. Regular maintenance can help you prevent extensive damage in the future, but it can quickly increase your expenses. Here are some strategies to shave off some dollars:
- Don't skip it: Yes, maintenance adds to your workload, but it'll allow you to catch things sooner rather than later. It could help you avoid a more expensive repair later on.
- Do it yourself: You don't need to hire professionals for all maintenance activities. If the task isn't complicated, you can try to do it on your own. It may require more effort, but it'll cost you less.
- Choose your providers carefully: Rates vary between service providers, so it's crucial to compare what they offer before deciding on one.
- Build relationships: You'll eventually find providers you prefer, and you may decide to use their services regularly. The more you work with them, the better your chances of striking a deal or getting a discount.
Home Repairs and Remodeling Costs
Things will eventually start breaking down, even if you do routine maintenance. A leaky faucet may not be so bad on your finances, but a foundation repair is entirely different.
You may eventually want to have some areas of your house remodeled. It's a great way to increase your home's value, but remember that these may be costly.
Types of Cost
How Much Does It Cost?
What Is It For?
Homeowners spend an average of
When your home's foundation is
Roof repair or
You'll spend around $1,000 to get
Repairing damages to your roof can
Restoration due to water damage
Restoration services cover water
It can cost anywhere between
Mold removal and remediation
You might have to shell out $16,000
Basic remodeling involves aesthetic
Strategies to Lower Renovation Costs
Renovating your home is an excellent idea. It increases your home's value and may save you money in the long run (think energy efficiency). However, whether it's a minor project or an extensive one, you'll need to shell out some money. Here are some tips for new homeowners to help keep costs under control.
- Have a budget and stick to it: Starting with an upper limit can help you decide on the kind of renovation you want to undertake. It'll also direct choices when it comes to materials and purchases.
- Do some of the tasks yourself: Don't leave everything to your contractors. You can do the demolition work yourself and pick up the materials.
- Reuse and repurpose: There might be fixtures that you want to remove, but see if you can use them for something else. This way, you will only have to purchase new items for some things.
- Watch out for deals: If you want to replace furniture or appliances, wait for a sale before purchasing new ones.
Paying Off Your Mortgage
HomeLight's 2022 Buyer and Seller Insight Report found that 69% of new homebuyers used a mortgage to purchase their home. It's an excellent way to help finance your home purchase, but it also means ensuring you have the means to make your monthly dues until you've repaid your loan.
MoneyGeek's guide provides tips to homeowners about paying their mortgage, understanding the factors affecting the amount and exploring programs that could help you with your expenses.
When Should You Pay Your First Mortgage?
Your first mortgage payment typically depends on your closing date.
Closing towards the end of the month gives you about 30 days to prepare for your first payment. However, closing early in the following month provides you with more time. For example, if you close on May 28, your first payment is due around early July. However, if you close on June 3, your first payment will be due in early August.
Regardless of your closing date, you'll pay the same amount. However, the more time you have until your first payment, the higher your closing costs are.
Afterward, you'll pay your monthly amortization on the same day each month. Setting up automatic payments is an excellent strategy to avoid missing them and incurring late fees and other penalties.
Factors Affecting Your Mortgage Payment
Lenders consider several factors when calculating your monthly due, such as the following:
Fixed-rate loans assure you that your monthly due remains constant for the life of your loan. MoneyGeek's mortgage calculator can give you an estimate of your monthly due.
Variable-interest loans have lower rates but are affected by market conditions. If your lender increases interest rates, your monthly due also becomes higher.
New Homeowner Mortgage Assistance
Purchasing a home is a significant financial obligation. Although mortgage payments aren't the highest contributor to homeowner costs, it still accounts for 30% of expenses.
Most people have 30-year mortgages, which may become challenging to manage over time. Fortunately, you can find financial assistance or programs to help you.
LIFT Act of 2021
- Must be a first-time, first-generation homebuyer
- Income must not exceed 120% of the median income of your area
The program allows new homebuyers to build equity twice as fast while roughly paying the same monthly amount as you would with a 30-year mortgage.
National Homebuyers Fund (NHF) Down Payment Assistance
Remember, the higher your down payment is, the more manageable your monthly due becomes. Homeowners strapped for funds can avail of the NHF's down payment assistance to help with upfront costs.
You can get as much as 5% of the mortgage loan amount, which you can use to cover your down payment or closing costs. Although the NHF considers your FICO score and DTI ratio, its requirements are more flexible than traditional lenders.
Instead of borrowing from private lenders, you can consider those the federal government offers. Examples of these are as follows:
- FHA Loans: Only requires a down payment of 3.5% if your credit score is 580 or higher. Borrowers with lower FICO scores must come up with a 10% down payment.
- VA Loans: Best for veterans, surviving spouses and active military members. You can get lower interest rates and won't have to pay a down payment.
- USDA Loans: This government home loan works best for homebuyers with low to moderate income from rural areas. It doesn't require a down payment, nor has a minimum credit score requirement.
These could be better mortgage options compared to traditional ones.
4 Mistakes New Homeowners Should Avoid
Purchasing your first home is an adventure, and you're likely to be more excited about starting home improvement projects or looking for ways to improve your forever home. Be careful not to take on too much. As a new homebuyer, you may make some financial mistakes that could affect your bottom line.
Not budgeting for costs outside your mortgage
Yes, your monthly mortgage payments are crucial, but they shouldn't be your only focus. Owning a home comes with other expenses, such as paying your property tax or getting a homeowners insurance policy.
Starting too many home improvement projects
The beauty of having your own home is you're free to make improvements as you see fit. Remember each project you undertake adds costs to your household budget. Having too many may eat into your mortgage payments or savings.
Deprioritizing regular maintenance
It's easy to say you'll deal with seemingly insignificant damages later, but the longer you wait, the more extensive they become. Doing routine maintenance (and acting accordingly) can help you save money in the long run.
Making multiple significant life changes at the same time
You must consider the timing when you purchase a home because it's a considerable commitment. For example, if you plan to make a career shift, wait to do it until after you've bought a house.
Expert Insight on What to Expect as a New Homeowner
Industry leaders and subject matter experts are excellent sources of tips for new homeowners. MoneyGeek reached out to several and asked them to provide their insights.
- After paying the closing costs, most homeowners mostly focus on paying for their mortgage, insurance and property taxes. What costs do new homeowners usually forget about?
- What challenges do first-time homeowners usually encounter but don’t anticipate?
- What advice can you give new homeowners to make their move less stressful?
Personal Financial Consultant at Take Charge America
Founder and CEO of NESTER
Founder & CEO of Watson Buys
Resources for New Homeowners
Owning and maintaining a home is a considerable financial commitment. Besides providing new homeowner financial tips, MoneyGeek also included a list of resources that may make homeownership less overwhelming.
- The Only Moving Checklist You’ll Ever Need: Moving from one location to another can be stressful. This checklist helps you put things in order and prevent anything from falling through the cracks.
- Budget Calculator: It’s crucial to know where your money’s going and ensure you have enough funds set aside for monthly or maintenance costs. This calculator incorporates various expenses, from housing, transportation, debts and loan payments, among other things.
- Estimator Tool: This online tool helps estimate expenses for a remodeling project, paint job or window and door replacements. You can even calculate the potential cost based on the hourly rates of various contractors.
- Home Maintenance Calculator: Figure out possible home maintenance costs based on the age of your home and appliances.
- Remodeling Calculator: Figure out how much money your renovation can cost. You can use different parameters to help you get a more accurate estimate.
Financial Assistance Programs
- First Home Club: The Federal Home Loan Bank of New York offers a matched savings plan to help first-time buyers purchase a home. Read about the eligibility requirements and see if they apply to you.
- Freddie Mac Home Possible: Freddie Mac’s mortgage option offers flexible requirements. You may want to consider it if you’re looking for financial assistance.
- Help Buying a New Home: USA.gov shares a list of programs you can explore to help you purchase a home. Check if you qualify for some of them.
- FMCSA-Registered Movers: Unless you’re planning to haul your belongings to your new home yourself, you’re likely to hire movers to do it for you. You can use this site to find approved movers, especially if traveling from one state to another.
- Home Guide (Landscapers Near Me): Each landscaping company has something different to offer. Use Home Guide to find several service providers in your area so you can make a comparison.
- PestWorld: Pest control is an essential part of maintaining your home. Find an exterminator near you through PestWorld’s database.
About Nathan Paulus
- Fannie Mae. "What are the Biggest Costs of Homeownership? (Hint: It’s Not What You Might Think." Accessed November 3, 2022.
- FRED Economic Data. "Median Sale Prices of Houses Sold for in the United States." Accessed November 2, 2022.
- HomeLight. "2022 Buyer and Seller Insight Report." Accessed November 2, 2022.
- State Farm. "How Much to Budget for Home Maintenance." Accessed November 2, 2022.
- U.S. Bureau of Labor Statistics. "Consumer Expenditures – 2021." Accessed November 2, 2022.