Don't Be Surprised by Expenses of Homeownership

couple in front of their first homeWhen Katie Cody bought her first home, she thought she knew everything there was about taking care of one. As a spokesperson for Lowe's, the national home and hardware chain, she was steeped in the ins and outs of home maintenance.

But even she wasn't prepared for everything that comes along with a first home--the work or the hidden costs. "I had no idea how much is involved in yard work, especially during the summer months," she said from her office in Mooresville, N.C. "Besides cutting the lawn every week, you have to mulch, and plant, and trim. There are just so many things I never thought of."

Most first-time homebuyers are focused on saving for a down payment and qualifying for a mortgage, and once they get past those financial hurdles, they think they are home free. But, say experts, as the owner of a first home -- whether it is a newly built home or a charming 1930s bungalow -- you need to think beyond that first mortgage payment when determining how much money you need to have available.

"Most financial experts say to have three to six months worth of mortgage payments in an emergency fund," says Michele Lerner, a real estate expert and author of "Homebuying: Tough Times, First Time, Any Time."

Lerner said that the best way for a first-time homebuyer to become aware of the peripheral costs of owning a home -- expenses beyond the mortgage, taxes and insurance -- is to talk to a few key people before you buy your first home. Your real estate agent, home inspector and the sellers of the home that you are purchasing all have critical information that will help you determine the real cost of owning a home.

"Real estate agents know what goes on in a community in terms of town or housing association fees," Lerner explains. "They can tell you if garbage pickup is provided by the town, and is paid as part of your taxes, or if you will pay a private company. Is the house on a private road? What's the snow-removal policy? These are expenses you need to be aware of."

What else should prospective first home owners know? Lerner suggests that buyers ask the following questions before taking ownership, to understand the true cost of owning a first home.

When were appliances and major systems last repaired or replaced?

Bigger expenses, such as structural repairs and replacement of big-ticket items such as hot water heaters and appliances, are harder to predict. "When you are touring a home, ask the owner how old the appliances are, when the roof was last repaired, how the furnace has been maintained," said Lerner. "If work was recently done, there might be warranties. They are the best source for information like this."

What are the average monthly utility bills?

Ask your real estate agent or the home seller for the average cost of utility bills: that includes gas, electric, water, even cable and Internet. There are many apartment dwellers who have never seen a gas or electric bill. And even for those who have, the costs of heating and cooling your first home might come as a shock.

Who are your repair people?

The seller is also a good source for a list of repair people for you to have. Because when the sink backs up as you are preparing Thanksgiving dinner, you need to know the name of a local, reliable plumber. As a first-time homeowner, it's also helpful to have the names of service people -- think plumber, electrician, landscaper, handyman, appliance repairman -- who are familiar with your home. They can be a good source when you can't find the water shut-off valve, or to tell you how to turn on the furnace that first cold day in October.

Get a home inspection

Not exactly a question, but another source for answers. When you do decide on that first home, be sure to have a home inspection. "These people can tell a lot about the condition of things, such as the heating and air conditioning system, the plumbing, and structural issues of the home," says Lerner. "They can tell you that you will need a new hot water heater and how much it will cost. Attend the home inspection and take notes."

That goes for both new homes and older homes, she said. "With a newly built home, you think you won't have any problems, but you don't know if someone made a mistake. It's better to be prepared, and at least get familiar with the house."

For Cody, buying her first home was "exciting, but overwhelming. There is always something to deal with. You have to become an expert pretty quickly." And the best way to become an expert is to ask the right questions before you buy.

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