So you’ve bought your dream house, yey! It does take a lot from us to be able to make that first purchase: many, many years of blood, sweat and tears, before it comes to that winning moment. And when you’ve finally gotten a hold of the keys to the kingdom, you realize that it still isn’t uphill from there. There will be more shelling out of money coming your way, just when you thought you’ve already shelled out enough. In this article we wrote 5 expenses every new or first-time homeowner should know.
While it is an achievement in itself for someone to buy their own house, it is still no easy feat to put the pieces together and make it a home, as the expenses for first-time homeowners continue to surmount. They say the devil is in the details, and while that may be true, these small and slow steps, if carefully treaded and accomplished, will give us one of the most rewarding achievements in our life. Being able to have your dream house and giving your family (or yourself) the life they deserve is everyone’s dream, and all the little steps we need to take are necessary to make that dream a reality.
Not everyone gets the chance to realize the dream of owning their house, so it is imperative that we make sure we are doing the correct things, so we don’t waste the (probably) once-in-a-lifetime chance of owning a house, as well as the money and effort we have put in realizing this dream. Any one of us would wish we had an “Idiot’s Guide to Preparing a New House”, but we’re not sure that even exists that’s why we’ve put together a list of five possible yet essential bank-breakers that first-time homeowners must prepare for, prior, or say maybe a few months into the big move.
5 Expenses You Should Know as a First-time Homeowner
1. Down payment
Most developers now offer pre-selling house and lots, which are usually termed on a per-month basis, basically a ‘monthly’ down payment scheme. In availing pre-selling house and lots, what basically happens is that the payment period will be longer, which in turn makes the monthly amortization lower. Some offer a 6-month window to complete your down payment, then the house can be turned-over to the owners; then they will begin to pay the monthly equity.
Monthly down payment schemes, though, are not the only way to go about in buying a new home. Banks loans are available to try to trim down expenses for first-time homeowners, as well as some government agencies like PAG-IBIG housing loans. You can check out their websites or personally inquire so you can choose which one will cater to your needs (and budget) the best. These agencies will provide the needed amount for you to pay the down payment, and then in turn, you will be paying them that amount, plus a corresponding interest. Interest rates differ from one bank or one agency from another, that’s why it’s important to do your due diligence in knowing the correct interest rates and other fine prints.
In my personal research, developers usually employ monthly down payment scheme so that the payment wouldn’t be as hefty on the budget. We all want to make sure that our hard-earned money is put to good use, that’s why it is important to be very, very cautious of these details. You have to make sure that the financing plan fits you perfectly, so that in the long run, it won’t cause any difficulty in maintaining your payment schemes.
2. Maintenance and repairs
In the pre-selling of houses, and the early turn-over of the same, it follows that the unit may not be as completely constructed as we would hope it would be. Some developers turn-over ‘bare-type’ unit, which means you may have to do partitioning in certain parts of the house on your own, like if you want to have two rooms, or a bar in your kitchen area. You will also need to set up the electricity and water lines, which may be tedious, but are extremely necessary expenses for first-time homeowners.
When setting up repairs or having additional construction activities, you also have to consider if the developers will let you bring in your own team, or if they have in-house construction people. Some developers encourage you to let the in-house construction crew do the repairs you need to set up, to stay close to the aesthetic or the physical identity of the community, so they’d know how to align to that.
Maybe you’d need to put up your gate, or a few walls in the house, a balcony, or an enclosure in some corner, you’ll for sure need prepare for this financially, but also spatially, and this would entail the need for you to meet with a professional. You can browse online for inspiration, but an architect or engineer will most effectively help you in terms of construction and design. This will again cost you a reasonable amount of cash, and that’s another thing you should prepare for.
3. Furniture and appliances
This is probably my favorite part, but also one of the most expensive ones, because this is where things start to come together. You already have the space prepared, the lay-out of things all ready in your head or on your Pinterest vision board, and the only thing you need to get this party started is the all-important budget. In this case, the internet is your best friend, and your worst enemy: while there are countless deals of different furniture online, you should be extra careful of availing of these deals since you are basically buying them through pictures and the seller’s recommendations. You can also reach out to friends or family who may have recommendations or shop suggestions.
Physical shopping for furniture, though, will take much time and effort from your end, because with this, you may need to take time off of work, or make your days extra long to cater to your shopping needs. Although you have to remember that this is necessary for you to ensure that your furniture pieces are worth the investment and will last you a long time in your house. It’s also a great way to make sure that your house will look, feel and function at its best with the furniture and appliances you will be buying as these are essential expenses as a first-time homeowner.
At the end of the day, your preferences in terms of design, your needs and your budget are what you need to meet at a compromise to guarantee that you will have a livable, properly-functioning and aesthetically-pleasing home. That Pinterest vision board may or may not be met, it just depends on which of your budget or your design will have to give way to the other, one way or another.
4. Property fees and HOA fees
With a dashing new house come other fees regarding real estate. These need to be settled on time and regularly, so it’s important to do your research regarding these fees. A few of these are as follows: Real Property Tax, Capital Gains Tax, Documentary Stamp Tax, Transfer Tax and the Title Registration Fee. These taxes are payable to the government alone, and other fees you should consider are the Homeowners’ Association (HOA) Fees, if the house you buy is located in a village or subdivision, and other local government taxes, all of these on top of your other expenses as a first-time homeowner.
Taxes are mostly on a per-year basis, one or two, maybe three years. The important thing about taxes is that these have deadlines set by the government, so as a homeowner, you should have all these dates lined up in your head, or at least on a trusty day planner. HOA fees, on the other hand, are mostly collected monthly, though you may opt to have them settled annually or a fraction thereof. HOA fees are usually inclusive of utilities payment for communal facilities, like street lights, labor charges for the village guard, street sweepers, or if you have one, the keeper of the village clubhouse.
Read Also: A Beginner’s Guide to Filing Taxes
When the time comes and you feel the need to tweak a little on the design of your house, you will need to contact you HOA if the repair or construction warrants a building permit. Also, if in the future, you will consider adding a new wing or floor to your house, you will also need to clear with your HOA, then to the local government for building permits. These will incur expenses on top of the actual construction expenses, so you may need to keep this in mind should you decide to make design changes in your house.
Ahh, the all-important, never-ending, life-defining facet of owning a house: BILLS. A fully functional house cannot run without electricity and water, at the minimum. The debate between which one is more important is still on-going, but I guess we all agree that we need both to do the essentials inside the house: the laundry, washing dishes, cooking, working; the list goes on and on. Setting up your electricity and water lines are equally as expensive, as these are essential expenses for first-time homeowners, but once you get them running, the bills never end. Oh and we forgot to mention the almost as-essential internet service. With the ‘new normal’ looking to normalize working from home (and doing a whole lot of things from home instead of out of the house), it will also cost us money in trying to have stable internet service available in the house.
With prices of basic commodities and utilities sky-rocketing at an all-time high every day, it will be very challenging to always stay on top of things all the time. Thanks to the availability of a wide array of appliances and/or furniture which are cost-efficient and are energy-saving, we now have a myriad of options to choose from, to make the most out of our budget, or at least not break the bank. That’s why we’re earlier pointed out how important it is to carefully research appliances before buying them, because it will also affect how much energy is consumed, or if the consumption is efficient. We don’t want to scrimp on our initial budget and then suffer in the future with unexpected breakdowns of our washing machine, or refrigerator just because we bought the cheapest ones, or the prettiest ones. This is not to say that cheap or pretty appliances are of poor quality, it’s just that we have to be careful in researching and buying so we won’t have to replace our things frequently, leading to unnecessary and unplanned expenses.
Putting together something that you’ve worked so hard for is not easy, with the many tedious steps before you materialize your goal, as your budgeting skills, and your budget will be tested to the absolute limit because of these expenses as a first-time homeowner. But keep in mind that these little steps will bring you to your dream, that’s why it is necessary to take them. As the popular saying goes, “it’s gonna get harder before it gets easier. But it will get better”. If you look at the magnitude of the expenses in totality, it’s easy to get overwhelmed, but taking these using little steps at a time will help you see that while it is difficult, it isn’t impossible.
Remember that preparing for building and ultimately, living in your future home will need your commitment, not only physically but also mentally and financially. In your adventure to finding and building the perfect home, preparing for it is half the battle. May this guide help you see what you will be putting yourself into, and motivate you to commit to work towards achieving this goal. Keep in mind the goal: a home waiting for you at the end of a tiring day in work or from play, a complete kitchen stocked with all the comfort food you will ever want, then you will be sitting on a couch in front of the TV, tossing your shoes in the air and putting your feet up to rest. Then, a bathroom comforting enough as you wash the grime of the day away, and a bedroom to catch you before you dream off your next dream. You’d probably have an open-air balcony if you’d like, and maybe a roof deck where you can watch the sunset from, or the fireworks from a nearby display. Then you’d say to yourself: “THIS is the life”.