What to Expect in Your First Year of Homeownership
While the first year of homeownership will be super exciting, it will also bring many obstacles and a large amount of changes in your life. As with any change, having a small idea of what’s to come can put you in the best position to react accordingly and be best prepared. In this blog, we’ll be going over what to expect in your first year of homeownership so that you’re not caught off guard.
Maintenance & Home Repairs
Unless you opted for a townhome or a condominium, your very first year of homeownership will bring you a new set of responsibilities that renting did not require. Even if you’re with HOA and shared costs for exterior projects, you’ll surely stumble across small fixes and appliance issues. You may have heard the stories from homeowners about how it is to fix the toilet or mow your lawn every weekend. You’ve officially now entered this realm, and it may be a little more time-consuming and expensive than you think! The National Home Builders Association (NAHB) reported that home maintenance accounts for around 10% of a homeowner’s annual property operating cost.
According to a recent Cinch survey, about 45% of homeowners underestimate the cost of home maintenance. 50% of homeowners that were surveyed put a home improvement project or new appliance on their credit card. Especially as a new homeowner, we recommend saving three to six months of living expenses for any emergency that could arise. The last thing you want to do is fall into debt due to a lack of preparation, especially with your new responsibility and obligation: your mortgage.
Changes in Utility Costs
The switch to homeownership brings an uptick in your utility bills that you may not have budgeted for. A larger space means a larger bill. In the US, people who rent apartments should plan to spend at least $250 per month, while homeowners should budget for around $400 a month. Of course, utility bills vary by state, but in California, utility prices are about 8% higher than the national average. Fortunately, there are ways to lower this bill.
An excellent way to start is by simply evaluating any trouble spots in your home’s energy usage by getting a home energy audit. This assessment will display how much energy your home consumes and recommend measures you can take to make your home more energy-efficient. Many power companies will also offer homeowner’s a discount for running certain appliances after a certain time of the day. For example, you can save 5% – 20% on your energy bills if you run your laundry early in the morning as opposed to the afternoon. Contact your local power company to find out what they offer in your area.
Taxes & Deductions
Another element homeowners underestimate is their property taxes. The Cinch survey found that 36% of homeowners found their property taxes to be higher than they expected. According to taxrate.org, the average property tax in the state of California is $2,839.00 per year for a home worth the median value of $384,200.00. Counties in California collect an average of 1.125% of a property’s assessed market value as party tax per year. While this is the most beautiful state to live in, California has one of the highest-priced homes. Fortunately, its property taxes are below average. California property tax is unlike any other state due to Prop 13 passed around 1980. Other states reassess the market every 1-3 years. California uses the original purchase and adds a max of 2% to the base assessment each year. One of the good surprises is a new tax deduction for some. If your mortgage is secured by your home, then homeowners might be able to deduct the interest they pay on mortgage debt.
Homeownership can be a scary process, but it doesn’t have to be. When you work with an Art of the Homeownership partner like Community Mortgage, you’ll feel confident that you’re taking the right steps and are fully prepared for what’s to come. We hope this blog helped you see what to expect in your first year of homeownership! To learn more, give Community Mortgage a call at (619) 692-3630 or click here to schedule a FREE mortgage consultation.
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814 Morena Blvd #310
San Diego, CA 92110
Phone: (619) 692-3630
NMLS ID # 908271
Community Mortgage, Inc. is an Equal Housing Lender. As prohibited by federal law, we do not engage in business practices that discriminate on the basis of race, color, religion, national origin, sex, marital status, age, because all or part of your income may be derived from any public assistance program, or because you have, in good faith, exercised any right under the Consumer Credit Protection Act. Disclaimer: Programs subject to change without notice. All borrowers must qualify per program guidelines