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3 Hidden Costs Of A New Home And How You Can Avoid Them

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3 Hidden Costs Of A New Home And How You Can Avoid Them

Nobody in their right mind would say that buying a home is inexpensive or cheap. In fact, it’s probably one of the most expensive purchases a person will make in their lifetime. In 2014, the average sale price of a home was $311,400. That’s no mere drop in the bucket for the majority of homeowners, yet, on average, new homebuyers spend $7,400 more in the first two years of ownership than existing homeowners.

The National Home Buyers Association (NAHB) has found that a home purchase has a ripple effect and makes most new homeowners spend more money on average. This begs the question: where are these hidden costs, and how can you avoid them?

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1. Don’t Buy Furniture To Fill Up The Extra Space

A majority of new homeowners buy a house that has more space than where they were living previously. Of course, the natural inclination is to fill up that empty space with furniture. According to the Consumer Expenditure Survey from the Bureau of Labor Statistics and the NAHB, new homeowners spend $5,025 on average on new furnishings. That’s $3,364 more than people who are existing homeowners.

Much of this is spent on bedroom furnishings, specifically mattresses. New homeowners outspend existing homeowners six times when purchasing bedroom furniture. Spending a bit more money on bedroom furniture than an existing homeowner seems logical, though. Sometimes families purchase a new home because they’re adding a new family member and they need more room – with that new family member comes a new bed and new bedroom furniture.

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However, another big-ticket item that new homeowners purchase is a couch, spending $746 more than what an existing homeowner spends. Remember, when you buy a home, don’t feel like you need to go out the next day to purchase brand new furniture. It’s OK to have some empty rooms and space in your new abode, especially if you don’t need to have a guest room or extra sofa right this minute.

2. Don’t Undertake Remodeling Projects Right Away

One of the bittersweet parts of moving to a home is you no longer have to worry about having a landlord, but it also means you’re responsible for the maintenance of your home — and there will be maintenance. Appliances will break down, systems will fail, and you’ll have to foot the bill every single time. According to US News, homeowners will spend between 1% and 4% of their home’s value on maintenance costs each year. However, according to the Bureau of Labor Statistics survey, new homeowners end up spending $4,642 if they purchased an existing home, which is $2,229 more than individuals who already own their home.

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Where does this extra spending come from? For buyers who purchase brand new homes, the $4,275 they spend mostly goes toward remodeling projects (think patios, new driveways, or fences). If you’re looking to save money, don’t start remodeling within the first year of homeownership. If it’s a project you can live without, save up for it over the years.

For new homeowners who purchase existing homes, they spend a bit more than homeowners who have purchased new construction homes, but not by much (only $367 on average). Most of this is spent on repairs and replacements for old and worn-out systems and appliances.

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To combat this extra expense, it might be a good idea to look into a home warranty. Home warranties will cover most systems and appliances in a home if they fail from normal wear and tear (not neglect). Prices for home warranties average between $300 and $600, depending on the level of coverage, with a $60 flat rate fee for a service request to complete the repairs or replacement. The average household opens 1.7 service requests in a year, according to Landmark Home Warranty’s data. That means a home warranty could reduce the amount of money spent on repairs and replacements by more than half.

3. Don’t Buy Brand New Appliances

Many times, homeowners get to their new homes and expect them to be just that: new. Instead, they find used fridges, washers, dryers, and dishwashers and realize that they want to start fresh — they want brand new appliances with their new house. Unfortunately, they spend an average of $2,665 on new appliances in their first year, which is over a thousand dollars more than existing homeowners tend to spend annually. This is ultimately surprising, since most homes come with installed appliances, but many homeowners just want their newer models. New homeowners typically spend the most on new televisions, fridges, washers, dryers, and computer systems.

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Although it is really tempting to get new appliances when you buy a home, most of the time these older appliances work just fine, and can work quite efficiently with proper maintenance. By using the appliances that come with the home, new homeowners can save a lot of money in their first year of homeownership. Plus, if the homeowner has a home warranty, their plan will most likely cover the repairs and replacements on a well-maintained system or appliance when it fails.

Featured photo credit: Markevich Maria via shutterstock.com

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Last Updated on January 5, 2022

33 Painless Ways to Save Money Now

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33 Painless Ways to Save Money Now

In a difficult economy, most of us are looking for ways to put more money in our pockets, but we don’t want to feel like misers. We don’t want to drastically alter our lifestyles either. We want it fast and we want it easy. Small savings can add up and big savings can feel like winning the lottery, just without all of the taxes.

Some easy ways to save money:

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  1. Online rebate sites. Many online sites offer cash back rebates and online coupons as well. MrRebates and Ebates are two I like, but there are many others.
  2. Sign up for customer rewards. Many of your favorite stores offer customer rewards on products you already buy. Take advantage.
  3. Switch to compact fluorescent bulbs. The extra cost up front is worth the energy savings later on.
  4. Turn off power strips and electronic devices when not in use.
  5. Buy a programmable thermostat. Set it to lower the heat or raise the AC when you’re not home.
  6. Make coffee at home. Those lattes and caramel macchiatos add up to quite a bit of dough over the year.
  7. Switch banks. Shop around for better interest rates, lower fees and better customer perks. Don’t forget to look for free online banking and ease of depositing and withdrawing money.
  8. Clip coupons: Saving a couple dollars here and there can start to add up. As long as you’re going to buy the products anyway, why not save money?
  9. Pack your lunch. Bring your lunch to work with you a few days a week, rather than buy it.
  10. Eat at home. We’re busier than ever, but cooking meals at home is healthier and much cheaper than take-out or going out. Plus, with all of the freezer and pre-made options, it’s almost as fast as drive-thru.
  11. Have leftovers night. Save your leftovers from a few meals and have a “leftover dinner.” It’s a free meal!
  12. Buy store brands: Many generic or store brands are actually just as good as name brands and considerably cheaper.
  13. Ditch bottled water. Drink tap water if it’s good quality, buy a filter if it’s not. Get 
      a reusable water bottle and refill it.
    • Avoid vending machines: The items are usually over-priced.
    • Take in a matinee. Afternoon movie showings are cheaper than evening times.
    • Re-examine your cable bill. Cancel extra cable or satellite channels you don’t watch. Watch the “on demand” movie purchases too.
    • Use online bill pay. Most banks offer free online bill paying. Save on stamps and checks, and avoid late fees by automating bill payment.
    • Buy frequently used items in bulk. You get a lower per item price and eliminate extra trips to the store later on.
    • Fully utilize the library. Borrowing books is much cheaper than buying them, but in addition to books, most local libraries now lend movies and games.
    • Cancel magazine/newspaper subscriptions: Re-evaluate your subscriptions. Cancel those you don’t read and consider reading some of the other publications online.
    • Get rid of your land-line. Do you really need a land-line anymore if everyone in the family has a cell phone? Alternatively, look into using VOIP or getting a cheaper plan.
    • Better fuel efficiency. Check the air pressure in your tires, keep up with proper auto maintenance, and slow down. Driving even 5MPH slower will result in better fuel mileage.
    • Increase your deductibles. Increasing the insurance deductibles on your homeowners and auto insurance policies lowers premiums significantly. Just make sure you choose a deductible that you can afford should an emergency happen.
    • Choose lunch over dinner. If you do want to dine out occasionally, go at lunchtime rather than dinnertime. Lunch prices are usually cheaper.
    • Buy used:  Whether it’s something small like a vintage dress or a video game or something big like a car or furniture, consider buying it used. You can often get “nearly new” for a fraction of the cost.
    • Stick to the list. Make a list before you go shopping and don’t buy anything that’s not on the list unless it’s a once in a lifetime, killer deal.
    • Tame the impulse. Use a self-enforced waiting period whenever you’re tempted to make an unplanned purchase. Wait for a week and see if you still want the item.
    • Don’t be afraid to ask. Ask to have fees waived, ask for a discount, ask for a lower interest rate on your credit card.
    • Repair rather than replace. You can find directions on how to fix almost anything on the internet. Do your homework, and then bring out your inner handyman.
    • Trade with your neighbors. Borrow tools or equipment that you use infrequently and swap things like babysitting with your neighbors.
    • Swap online. Use sites like PaperBack Swap to trade books, music, and movies with others online. Also, look for local community sites like Freecycle where people give away items they no longer need.
    • Cut back on the meat. Try eating a one or two meatless meals every week or cut back on the meat portions. Meat is usually the most expensive part of the meal.
    • Comparison shop: Get in the habit of checking prices before you buy. See if you can get a better price at another store or look online.

    Remember that saving money is not about being cheap or stingy; it’s about putting money into your bank account rather than giving it to someone else. There are many ways to save money, some you’ve never thought of, and some that won’t appeal or apply to you. Just pick a few of the ideas that sound doable and watch the savings add up. Save big, save small, but save wherever you can.

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    Featured photo credit: Damir Spanic via unsplash.com

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