Millions of people buy their first home every year and many of them make mistakes when it comes to spending and projects. In this how to we will look at some of the most recommended tips for new home owners and what mistakes to avoid.
The first thing you have to overcome is sticker shock and the realization that you have just signed into a long term loan that will change your spending habits for a good part of the rest of your life. Hopefully you put a large amount down and you got a great deal on the monthly mortgage costs but as an owner you have just accepted a number of bills that you may have never paid before.
Property Taxes are a huge eye opener for new home owners. This is something that you never had to deal with as a renter or something your parent’s probably never talked about. Depending on where your home is located and its value you can now expect to pay anywhere from $1,000 to $10,000 or more for an average property tax bill every year. Yes that is an average cost that can be as high as $10,000 in states like New Jersey or other high tax states. This bill might not even cover your cost of Local Sewer or Trash Taxes that can be billed separately. It is important that you understand when these bills are due and that you pay them immediately which can give you a 10% reduction in cost and don’t take the option of paying over monthly terms.
Homeowner’s Insurance is the next bill that you probably never paid and normally it is due in full once a year based on the day that you started your plan and moved into your home. There might also be an option to pay this bill over time but you should pay it in full and you will get a reduction on the overall cost of maybe 5% or more.
Paying for these yearly bills means that you save for them every paycheck. Figure out how much you expect to pay for them and then set up a separate checking account where you deposit money every paycheck to cover them. You should if you can add to this account to allow you to have enough to cover at least one set of bills without depending on your weekly savings. So if your Property Tax and Insurance Cost is a total of $5,000 per year you should slowly build up a Certificate of Deposit in these accounts that can be cashed in to cover your cost if you lose your job or some other problem arises. You do not want to lose your home to the tax collector because of a tiny bill after paying down your home for many years. Have the money saved and never touch it.
Utility Costs might also be something that you didn’t deal with as a renter. Many apartments provide you part of your utility bills from your monthly rent. These bills must be paid on time and it is best to get them paid as soon as they arrive and not wait until their due date to mail them. You can also have your Utility Company pull from your checking account the price of your bill and this automatic payment is normally the same as your paper based payment but the drawback is that you won’t have a paper trail of your transaction.
Having a Paper Trail And Ledger for Your Transactions
Whenever you pay your bills you should scan the bill along with your check so you have a paper trail of the payment. A good way to do this is to scan one page that shows the Bill Stub filled in, Your Check and the Envelope with Postage. This shows that you at least processed this bill and what was sent to them.
Recording this information in a ledger by recording the cost and your check number will make it much easier to prove you made payment if there is a dispute and it will allow you to contact your bank for information about when the check was processed.
Bank records are also important and you should ask your bank if they have the ability to provide front face scans of your paid checks on your monthly statement. This will normally show the front face of the bill and give you the date it was transferred to the utility or other entity.
Hold Off On Projects Until You Are Ready
One of the primary mistakes that new home owners make is that they try to complete too many projects when they first move into their home. This might include remodeling a kitchen or bath or it might be adding a deck or painting the entire home. Whatever it might be you really need to justify any project that you might be considering.
Have you done your research? Have you found the cheapest method to complete the project whether you will do it all on your own or whether you need to hire professionals for the entire project. Have you addressed more important things before you change things that are fully functional.
You might really want new cabinets and appliances in your kitchen but you don’t want to go into additional debt if you should be saving for other things.
Emergency Savings is a very important part of being a home owner. You never know when a storm might cause damage or an appliance or furnace or other major item of your home needs immediate replacing. There are ways to calculate how much you should have saved in your emergency fund but for now you should consider the replacement of one major thing to be the minimum. A new HVAC System might cost you $7,000-10,000 a new Appliance might cost you $1,000 and a single window or door replacement might be in the $500 range easily. These costs do come up from time to time and understanding the condition of your home is an important factor in how much you should have saved.
New Home Projects That You Should Address Immediately
Changing the Locks on your home is the most important first step whether you buy a new or a used home. You should do this the day of settlement or immediately when you take possession of the home. With a used home you never know who the previous owner has given a key to. It might be a neighbor, relative or friend but this does not matter you want to make sure that their key no longer works. As for new homes the problem is the same. A home builder is suppose to use a contractor’s lock on the door that is temporary and then install the new locks after all work is completed but normally this does not happen. This means that any of a variety of people could have keys to your home. The option for new homes is to request Smart Key locks that you can easily change the key to yourself but you are often just better off buying a new set of exterior door locks and installing them yourself. You only have to buy keys for the exterior doors. If you have a garage then you can reset your system and pair in the keyfobs again to erase any access by outsiders. Follow your manufacturer’s information on how to reset garage door openers to secure them.
Installing a Security System is the second most important thing for new home owners. If a home comes with a security system then you want to make sure that you have full access to the Programmer’s Installer Code so you can access the menus needed to erase the setup of all User Codes and Keyfobs. When you are dealing with a national company like ADT, Vivant or others they might not provide you the installer codes because they don’t want you to access this information. I suggest that you instead purchase your own system that is compatible with any Remote Monitoring Company you wish to use and then you will be able to access the Installer Code Setup and secure your system. It will also allow you to easily replace malfunctioning devices and also add devices to your system without a service call. It will also allow you to change monitoring companies without being locked out of your system.
Finding and understanding all of your Utility Cut Offs is a very important safety step. You should know where your main water cutoff is and any additional cutoffs that are located at sinks, toilets or maybe in crawl spaces and basements for appliances and outside hose bibs. You should know where your circuit breaker is and you should have all of your outlets, lights, appiances and big units like furnaces, water heaters, gas fireplaces marked on the circuits. You should know where your gas cutoff is both inside near appliances like stoves and dryers and fireplaces but also at the meter outside so you can cut off the gas without entering the home. Most Utilities will help you by sending out someone to audit your home and instructing you how to cut off your utilities as a free service or you can ask a Plumber, HVAC Technician or Electrician to help you with understanding your systems.
Cleaning and Disinfecting Your Home is the next major task. Whether you are buying new or used the time before you move in or unpack everything is the time to take to clean your home. Especially with used homes that have older carpet you want to purchase a carpet cleaning machine and then use Lysol Concentrate in the soap mix system to disinfect the carpet. It will make the home healthier and smell better but it will also remove dirt and kill mold and bacteria. The same is true for your bathrooms and kitchen. If you are buying a home with appliances you should deep clean them with a 15% concentration of bleach that is kept wet for 30 minutes or for surfaces that might be color changed then use Lysol Concentrate and keep the surface wet for the indicated time which is normally 15 minutes or more. Opening your windows for as long as you can when you first move in is highly recommended as fresh air is something that helps immensely. Even in winter months turning the furnace off and allowing the home to breath for an hour every day is not going to be difficult but in better weather just keep your windows open all day so your home breaths.
Painting Rooms before your move the furniture in is the best thing. If you need to paint a bedroom or other room in your home then do it immediately or before you move in. Even with Low VOC Latex paints you do not want to be sleeping in a freshly painted room for the first 24-48hrs even if it is warm out and you have the room ventilated. You will risk having a reaction to the paint as it cures if you sleep in it and painting without furniture will allow the job to go quicker. The same is very true if you are considering surfacing and staining hardwood floors or installing vinyl floor with adhesive. You don’t want to be in that room sleeping for 8hrs and breathing in the fumes just to realize a night or two on the couch might have made your body react much easier.
Understanding Your Property Lines is something every new owner should know. Where does your property meet up with your neighbor’s property and if there is any dispute you should get a survey made. This is actually something you should know before you purchase a property. Debating the position of a 15 year old fence on the first day you move in is not going to result in a pleasant relationship with your neighbor.
Buying Equipment and Tools necessary for Maintenance of your Property is a very important step that most people don’t even think about. If you have a lawn then someone will have to care for it and that someone is normally you. You will need a lawnmower, grass trimmer, leaf blower, rakes, shovels and the list goes on. Depending on your property you might have quite a list of tools you need to purchase either immediately or in the near future. Do you need the most expensive tools no you do not so it is important to do your research on what will work best for you. You might want a cheap $50 used lawnmower you find at a garage sale or you might want to spend the price for a new one. Do you need a shovel or a snow thrower to clear your driveway? The answers take time and the cost of this equipment may be high but your alternative is hiring contractors to do everything for you. For some a contractor might be the best option but for most of us doing it ourselves is easy enough and much more cost effective.
Final Note
This list of things you need to do when moving into your new or used home is not the final word. Things will come up that you didn’t plan for and that is why we stressed that the urge to do everything immediately is something you need to resist. You don’t want to have to get a second mortgage on your home just to do your projects. There are many more important things you need to do like just get use to all of the bills and general tasks that everyone has to go through.
Some steps like new locks and a security system are very important. When you take possession of your home it is now your duty to protect it, and its belongings and your family.
Other things are just easier to do up front and important like thoroughly cleaning, disinfecting and maybe painting some rooms.
But the most important thing is that you slow down and plan because you will be in your home for hopefully a very long time.