So, the good news is that you’ve found your dream home, and you are ready to sign on the dotted line and start packing. Think of all the fun you’ll have meeting new neighbors, tending to your garden and getting to know your new community. But, before you get to all that, it’s probably a good idea to get real about finances.
You may be thinking “what?!” I’ve already drained my bank account between the realtor’s fees and the appraisal fees and the title insurance and the…actual down payment for the property. How can there be more to pay for? When does the money pit stop getting deeper?
- Property Taxes: You may already be aware that your lender is going to require homeowner’s insurance if you have a loan out on the home. Premium rates vary from state to state. On the other hand, property taxes are something you may not have even thought about. In New Jersey, these tax bills can be extraordinarily high. Keep in mind that the figure you get from the bank regarding your mortgage payment is generally PLUS insurance and property taxes.
Even worse, just when you get used to how high your tax bill is, you may have to get used to an increase. In New Jersey, county and municipal tax assessors are allowed to re-evaluate the value of your home at will. This means your bill can go up from one year to the next without warning. Similarly, since the largest portion of property tax bills in NJ are based on school budgets, that portion of your bill can fluctuate sharply, as well.
Another thing to keep in mind: The county tax assessor can re-evaluate the value of your home at any time, so be prepared for those payments to increase right alongside your equity.
- Landscaping: One of two things can happen. A. You buy a property with beautiful landscaping and now you have to pay the bill for upkeep. B. Or you want to spruce up the curb appeal of your home. Even if you don’t hire a landscaper, flowers, shrubs, tools and your time are all expensive! At the very least, unless you live in a community with a homeowner’s association (then watch out for HOA fees!) you will have to mow your own lawn. Think: lawnmower, weed whacker, sprinklers, and pruners, not to mention, seed and weed and feed, etc. Or you could pay someone to maintain your lawn; that can get expensive.
Another option is to choose low maintenance landscaping like rocks and stones. Just remember that you may save time and money in the long-run, but hardscaping supplies are not cheap and they aren’t easy to work with unless you have the right tools. Again, ka-ching!
- Home Improvements: According to a news report published in the money section of U.S. News & World Report’s website, homeowners generally have to fork over up to four percent of the home’s total value to pay for repairs and routine maintenance. That’s per year!
Investing in a home warranty insurance policy may make sense if your appliances and house systems are old. Regardless of whether or not you pay for machines that break down by fixing them yourself or hiring a professional, these repairs and replacements can add up fast.
Further, some items need routine maintenance including carpeting (replacement or shampooing), painting (both the exterior and interior walls), updates to your kitchen and bathrooms, etc. All of these expenses can put you in the poor house if you aren’t careful. The good news is that not only do you get to enjoy the upgrades, but you hopefully will make back your property improvement investments when you go to sell.
One expense that you should never cut is hiring a qualified real estate attorney to represent you throughout the buying process and at the closing table. Joel R. Spivack, Esq. has successfully guided countless clients through the home buying and selling process in New Jersey. You can rely on him to protect your interests, as well. Contact him today for a free consultation about your real estate deal.