Buying A Home
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Buy Vs. Rent Expenses

We are considering buying a home, I'm curious what monthly expenses surprised you when you bought your first home?

So far I've gathered that if we buy a home we will have to add the following to our monthly budget:

Property Tax

Home owner's insurance

lawn care

emergency fund


Mrs. V

Re: Buy Vs. Rent Expenses

  • When I bought my first home in 2001, it was the cost for water/garbage.  Now, some places have this included in the property taxes, and others have at least the garbage included in the HOA, but that was not the case in my first place... it was paid quarterly so I had to learn to save a bit each month to pay the quarterly bill, which was in the $300-400 range.

    Along the lines of water, if you live in an area that has typical winters/summers, your bill will be higher in the summer, and much lower in the winter.    

    Also, if you're getting a mortgage, it's highly likely that your property taxes and insurance are going to be included in your monthly payment, and then your mortgage company will pay them when they are due.  So, you're still paying them, but it would be all in with your mortgage payment, vs a separate bill.  

    The other thing to look at is utilities in general... if you're moving from an apartment to a single family home, chances are your electricity etc. will be higher than an apartment.  
    short+sassy

  • Property Tax

    Home owner's insurance

    lawn care

    emergency fund


    Like the poster above said, I wouldn't worry too much about the property tax/insurance.  Those will be rolled into your mortgage payment.  However, do be aware, most banks when quoting monthly payments on your mortgage do not include the escrow (this is what pays your insurance/taxes).  So before deciding if you can afford the house, make sure you figure out the total monthly cost (principal + interest + escrow).  In terms of comparing this to renting, you were still technically paying it, it just wasn't broken down for you by whomever you were renting from.

    Lawn care is as expensive as you want to make it.  You could hire a service, but in my opinion, you're paying them to do what you can do relatively easily.  A few basic yard tools are a one time expense.

    The emergency fund is the big one to me.  Think about all the things you call your landlord to fix.  Those are now your problem.  Some can be headed off with preventative maintenance.  Others will hit like a ton of bricks.  We're reasonably handy, so most things we handle with a quick trip to the local home improvement store and it just comes out of our regular cash flow.  But if you're not handy, you'll be calling someone each time which adds to the expense.
    Daisypath Anniversary tickers
    short+sassy
  • Thanks for your suggestions! Anyone have a good way to estimate utilities for a home?  Is there an internet tool to estimate...? 

    Mrs. V

  • Thanks for your suggestions! Anyone have a good way to estimate utilities for a home?  Is there an internet tool to estimate...? 
    I'm not sure if there's a good tool.  You can get a rough idea from what you're using now assuming the place you're renting doesn't include all utilities.  Things like water usage don't go up with the size of the house.  Electric/gas will vary depending on how the place you're in now is built and the size compared to the size of the new place and the construction there.  However, when we moved from one house to another, the newer was about 3x bigger.  So I guessed based off that.  Got a pleasant surprise when the bills came in a lot lower than expected.

    I would say you could try asking the sellers what their bills are, but that varies so much based on their usage patterns, temperature comfort, etc.  The former renters where we now own were paying $300-400 electric bills.  We're paying about $150 or lower depending on the season.
    Daisypath Anniversary tickers
  • Thanks for your suggestions! Anyone have a good way to estimate utilities for a home?  Is there an internet tool to estimate...? 
    Yes like jtmh said, you can ask previous owners about their averages, and in some areas, you can call the utility company directly and ask them for the averages.  But it does depend on a lot of factors.. how hot/cold they keep the house, what the insulation is like, what the windows are like, etc.  I know we keep our heat at 70 in the winter, and our neighbor keeps theirs at 78... so naturally their bills are way higher than ours.  Our electricity is also higher when my H is working from home versus traveling for work since he's using it all day, versus when it's just me I'm only using it for a couple hours a day.
  • The other PPs are right on.  But for true monthly expenses, mine actually went down a lot.  My mortgage payment, which included insurances/property taxes, was $350 less than my previous rent.  I'd previously been renting a house that was about the same size as the one I bought.  I figured all the utilities would stay the same, but the electricity bill actually went down by about 20% because my home was so much easier and more efficient to cool/heat.

    But I initially spent a chunk of money buying a lot more tools and a lawnmower, and that kind of thing.  Before, I'd only had a small very basic toolbox.  I also had to buy all my appliances.  Ugh!  Another huge chunk of change...and that was even with buying my fridge and washer/dryer used.

    I also started stressing about getting a good-sized e-fund...and fast!  I had no savings after closing and prayed nothing went wrong.  Not the best way to do that, lol.  But I got lucky and there was no catastrophe.  The house did need a lot of work, most of it could be done over time.  I spent the next two years putting roughly half my extra money toward repairs/improvements and half into an e-fund.  It would have been a shorter time than that, but I was laid off a few months after I bought the house.

    Haha, come to think of it, getting laid off was a catastrophe.  But I could still pay all my basic bills, it just put off the repairs.   

  • Thanks for sharing your experiences.  I definitely would need to purchase lawnmower and such - didn't think about that before!  I will be sure to call the electric companys for estimates too!

    Mrs. V

  • For us it was insurance, renters insurance is a lot cheaper as the housing insurance companies expect you AND the owner to have insurance. With being the owner it shot up, not to mention renting a newer place vs buying an older home the price went up. 
  • As far as utilities go - our electrical stayed the same...our house was a few hundred sq. feet larger than our apartment, but our thermostat allowed for scheduling, and the house was more energy efficient than our apartment had been. And then a couple years later when we bought a new HVAC unit our bill went even lower!

    Be prepared for your water/sewage bill. We were "lucky" because we have a septic system so we're only paying for water....but the money we would have put in to sewage needs to be saved for when we have to have the septic serviced.

    Pest control. We live in Georgia so you have to perform some sort of pest control, whether that's on your own or through a service. We also pay for an annual "termite bond". It's kind of an insurance for when (not if) you get termites and it's also a regular treatment around the house to help prevent termites.

    HOA dues if you live in a HOA community.

    We spent a lot of money those first few months. Lawn care equipment, tools, materials to repair/replace/improve various things around the house.

    Do you currently own your own washer/dryer set? Will the seller's leave their fridge or other major appliances? Just some big ticket items to think about.
  • Also, about property taxes...they typically go up especially if you're in a place with good schools. In our first neighborhood, there were other young families. The property taxes increased and we all ended up having to pay $80 more to our mortgage payments. For some families we knew, they could barely make it work. Their budgets were that tight.

    Just be mindful of things like this. And pay attention to the property taxes in whatever cities you're looking. They can vary wildly. For example, ours here are $3,500 per year. My parents who live 20 minutes from us pay $4,500.


  • labro said:
    As far as utilities go - our electrical stayed the same...our house was a few hundred sq. feet larger than our apartment, but our thermostat allowed for scheduling, and the house was more energy efficient than our apartment had been. And then a couple years later when we bought a new HVAC unit our bill went even lower!

    Be prepared for your water/sewage bill. We were "lucky" because we have a septic system so we're only paying for water....but the money we would have put in to sewage needs to be saved for when we have to have the septic serviced.

    Pest control. We live in Georgia so you have to perform some sort of pest control, whether that's on your own or through a service. We also pay for an annual "termite bond". It's kind of an insurance for when (not if) you get termites and it's also a regular treatment around the house to help prevent termites.

    HOA dues if you live in a HOA community.

    We spent a lot of money those first few months. Lawn care equipment, tools, materials to repair/replace/improve various things around the house.

    Do you currently own your own washer/dryer set? Will the seller's leave their fridge or other major appliances? Just some big ticket items to think about.

    Good call!  Where I live in NOLA, we have huge problems with termites.  My initial treatment...for a house that didn't have termites, just to get the service started...was $1800.  Then it is another $235/year to get another spray and stay in their program.

    Where I live, most banks require a clean termite inspection to underwrite a home loan.

    labro

  • Good call!  Where I live in NOLA, we have huge problems with termites.  My initial treatment...for a house that didn't have termites, just to get the service started...was $1800.  Then it is another $235/year to get another spray and stay in their program.

    Where I live, most banks require a clean termite inspection to underwrite a home loan.

    We were so lucky! When we bought our home it was under a current termite bond so we didn't have a huge up-front cost. The bond ends in 2017 though so we're now facing a renewal cost of some sort. But it's not as huge as a house that had nothing to start with at least!
    short+sassy
  • good call on the pest control.... I don't know if that is an issue in North Texas (we've only been her a few years).  I do have a few appliances, but I'll have to make sure to add that to my check list.

    Mrs. V

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