Making the move from renting to owning your own home has long been a standard component of the American dream. But owning your own home can also come with some unexpected surprises for people who are used to renting. When you rent a home or apartment, your landlord takes care of a number of things that are now your responsibility as a homeowner. Here are 10 things to prepare for as a homeowner.
1. Higher bills
When you rented a home or apartment, chances are good your landlord or management company paid for a number of services that you will now be responsible for. These can include water, trash and sewage as well as amenities such as a community pool. Now you may have to pay a monthly HOA fee in addition to your mortgage. Your HOA fees may cover some of these expenses, but one way or another, your monthly bills are likely to be higher when you own versus renting.
2. Property taxes
Renters don't generally need to pay property taxes, but homeowners do. Conversely, you may also be entitled to certain tax breaks, credits or benefits as a homeowner that you were not as a renter. You will still have to pay property taxes, however, so that is something else you may need to budget for.
3. Higher maintenance costs
When you live in an apartment or rental unit and the furnace breaks down or there is a plumbing leak, you generally just call the landlord and they send someone to fix it. They also foot the bill for it. As a new homeowner, however, maintenance and repair expenses now belong to you. One way to plan or prepare for this is to look into a home warranty. Home warranty benefits can cover a number of unexpected expenses. Getting repairs done quickly is highly important. Otherwise, things can quickly snowball. The price tag for repairs can quickly go from a few hundred dollars to a few thousand dollars if they aren't addressed quickly.
4. More maintenance
In addition to having to pay for all the maintenance your home needs, you will also have to plan and schedule all that maintenance as well. Your landlord may have had services performed like HVAC inspections, chimney and vent cleanings and even had your lawn mowed and sidewalks cleared. As a homeowner, these will now be your responsibility and they are responsibilities you want to stay on top of. Just like an annual physical or dental inspection, you might want to get your roof, siding, furnace, plumbing and other major systems inspected yearly. This is particularly important if you live in a very cold or very hot climate. You don't want things to break down at the peak of hot or cold temps.
5. Keep some money in savings
As a renter, you may have saved up for things like going on vacation or the down payment on your home. Chances are good, however, that you didn't keep a significant amount of money in savings just for emergencies. As a renter, generally the worst thing that could happen if you couldn't pay your rent is you might get kicked out and have to go live in your parent's basement. As a homeowner, however, you now have equity in your home, or something to lose if you can't pay your mortgage, taxes and other bills. Life can turn on a dime, so it's important to keep a bigger financial cushion on hand than you might have when you were just renting.
Owning a home represents a significantly greater responsibility than renting. Yes, the equity you have in your home is yours when it comes time to sell, but until then the responsibility for caring for it and maintaining it is also yours. Owning a home will often mean less money for travel and entertainment, but that's okay. That also leaves you more time to care for and maintain your home.