Tuesday, November 8, 2011

Chronicles of a First Time Homebuyer: Expect the Unexpected

Today's Tip:

As a first time homebuyer, it's easy to get caught up in making it work: accepting the idea of an kitchen that doesn't quite meet your standards, embracing a longer a commute, learning a different town, and reconfiguring a budget so you can make a potential house your home.

When we were looking for houses, we did our fair share of changing our design expectations.  We forfeited big bathrooms, updated kitchens, level yards and varying commutes for the sake of potentially owning a home.  We'd walk through a house, wrapping our mind around things that fell outside of our expectations. And once we could mentally make it work, we'd put in our offer.  We knew that in many ways, beggars couldn't be choosers.  We knew that there would be some sacrifice along the road to our Dream Home.

There were also sacrifices in our household budget.  Every house we viewed would mean taking a knife to our budget: reconfiguring, estimating, verifying, and deciding what we could and could not live without.  When we finally got an agreement of sale on our current home, we finalized some budgetary matters, and felt prepared to go from first time homebuyers to first time homeowners.

But then came the Unexpected.

While there is an important learning curve associated with the leap from renting to buying, it's important to take note of the unexpected: the things you do not account for, the surprises, the wrenches thrown into an otherwise perfect plan.  They will happen.  

In our first year of owning a home, we were met with plenty of Unexpected: raise in utility prices, unforeseen house problems that required fixing, and the introduction of bills that we had in no way prepared for. 

One of the best things you can do as you are looking for a home is to PREPARE for the Unexpected.  Whether it's making sure you have a cushion of savings for unexpected costs or to leave room in your budget for unexpected bills, being ready for the Unexpected is half your battle.

Since most first time homebuyers are renters making the transition to owning, many do not know what possible Unexpected things to prepare for. Here are some to keep in mind as you consider homes:

Rise in utility prices

Having been renters, we had never really encountered the cost of oil. Oil is expensive, and we happened to move into our home right when oil prices tripled.  Literally.  We were surprised by how our bill jumped over the course of the year.  Oil is not the only culprit.  Electric and gas prices are going up as well. Keep in mind that it costs more to heat a split level than a ranch. If your heating system is older, it may be less efficient, resulting in higher-than-expected bills.  Energy bills are often higher in the Summer, due to Air Conditioning.  And even though it might be a short season, holiday lights and decorations can put a slight raise in your energy bills while they are up. Estimate higher for energy bills for your first few months until you get a good feel for your usage.  Budget for a slightly higher bills in the warmer months (and possibly around the holidays, if you go National Lampoons Christmas Vacation on your house). 

Pest Control

This is a bill that really threw us for a loop.  We never had to deal with pest control as renters. We moved into our home in the Summer, and all was well.  Winter proved to be no big deal.  March arrived, and with it came ants.  Lots of ants. More ants than cans of Raid could conquer.  We tried to manage it ourselves, but finally surrendered and took on a Pest Control contract.  I soon found that most homeowners have this in their budget.  It's inevitable that at some point in our homeownership, you will deal with pests, so consider leaving a cushion for pest control, just in case.

Change in Commute

Depending on how far you are moving from your current residence, you may have to account for an increase in transportation costs.  We moved about 30 minutes from our previous home (and my husband's job).  And it did not take long to realize that our driving gas costs would be going up.  Not only is my husband's job 30 minutes away, but so are many of our doctors, as well as our family.  So we had to build up the transportation expenses in our budget. Take any change in distance into account when you are reworking your new budget.

Home Repairs

Even with a home inspection that passes with flying colors, you will encounter various repairs throughout your homeownership.  Some are small: leaky faucets, loose lighting fixtures.  Some require more attention: a broken disposal, a clanking washer, a damaged gutter.  Many of those repairs can be addressed by you.  Then there are the Unexpected big repairs that come out of nowhere, but require special (contractor?) attention, and often a good bit of cash flow: a leaking roof, a dead HVAC, a dryer that no longer dries, a broken window.  These are issues that there are no way around except to fix it.  And they don't care whether you are ready or not!  Having a small savings set aside for these kind of issues can give you a peace of mind.  Investing in a Home Warrenty can also save you money in the long run and may be worth looking into.

Unexpected issues do not have to stand in your way of homeownership. Planning ahead and Expecting the Unexpected can help your Dream Home remain a dream and not a nightmare!

We'd love to hear from YOU: 
What "Unexpecteds" have you encountered as a homeowner?  
How did you handle them?

Leave a comment and share your story below!

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