The Costs Of A New Home: It’s More Than Just The Mortgage

Posted on September 7, 2007 by Melissa
Filed Under Budgeting, Household

Can we afford this? If moving into a new home is a goal of yours, I’m sure you have already thought about the impact the higher mortgage will have on your budget. But have you considered how the new home could affect your other bills?

To best prepare for the real costs associated with that new home you should look at the ways the new home could influence all of your bills.

Each home is unique and will have different costs associated with it. For instance, a “fixer upper” will need more in household/maintenance costs than a brand new home. A new home will likely need window coverings that might otherwise have come with an older home. Does the new home have significantly more windows that face the sun? If so, your energy bills could be affected.

Consider these questions:

Will your new home have a bigger yard?
Will you have an electric or gas cook top/oven or dryer?
Will you have more or less interior space to cool/heat?
Is the home in need of repairs or improvements?
Does the home include features that require additional maintenance (like a pool, garden, or professional landscaping)?
Will you now have to pay HOA fees?
Is the new home farther from work or the stores you shop at?

These are just a few of the things that could impact your budgeting in the new home. If any of these are “yes” you will likely need to revisit your current budget to account for the increase/decrease in those areas.

We are planning on moving out of an older home and into a larger to-be-built home by the beginning of next year. In addition to the increased mortgage costs, we are planning for the following increases in our future budget:

Electric Bill – it costs more to cool a larger area and to top it off we will have an electric oven instead of gas
Water Bill – it will likely cost more to water a bigger lawn and tend to a garden
Household - we increased this budget for all the little things that are needed after a move like missing hardware or small repairs
HOA - our HOA costs are raising so we needed to account for that in the budget
Alarm - we expect that monitoring the new alarm system will cost more monthly
Vet - we have projected a temporary increase in vet bills because the stress of the move could mean a higher potential for illness.
Furniture Savings – we have created a new budget area where we save a small amount each month earmarked for furniture. We want to save up for quality used or discounted furniture to fill out the home piece by piece.
Miscellaneous - we increased this budget because we are expecting to run into odd expenses that defy other categorization.

To be safe we are estimating high. Once we are in the new home and get a better idea of the actual costs we can fine tune the budget. But for now an estimate will have to do. We want to feel confident that we can afford not only the jump in mortgage payment, but also all of the changes that come along with it.

Comments

11 Responses to “The Costs Of A New Home: It’s More Than Just The Mortgage”

Kyle on September 7th, 2007 3:24 pm

Excellent points, I know when we moved into our bigger home a while back I had yet to consider a few of your points. Especially the A/C increase, this is why we had a whole-house fan installed to help offset the cooling costs a bit.
brip blap » Blog Archive » linkling hands across the blogosphere edition on September 8th, 2007 2:14 pm

[...] The Costs of a New Home: It’s More Than Just the Mortgage AND Are Prescription Co-Pays Ripping You Off? by A Penny Closer. I knew when I bought my home it would be more expensive, and I tried to plan for it, but there were many expenses I was unprepared for. Improvements were tough – we spent a lot on fixing up our new-construction townhouse. And to be honest, I never even considered the possibility that my co-pay wasn’t the best possible price. Two excellent articles. [...]
Personal finance at KMull.com on September 10th, 2007 6:11 am

[...] Penny Closer reminds us that A New Home Costs More than a Mortgage. We’ve more than doubled our budgeted utility expenses for when we move into our new [...]
Pinyo on September 10th, 2007 2:53 pm

Don’t forget renovation. I am spending / spent a lot on renovation on my house so far. Over the decade, may be $50,000 was spent.
The Carnival is Up! on Consumerism Commentary: A Personal Finance Blog on September 10th, 2007 5:47 pm

[...] Penny Closer says the costs of a new home amount to more than just the mortgage. That’s right along the lines of The Cost of Buying a Home Over 30 [...]
Melissa on September 11th, 2007 6:21 am

Good idea, Kyle! We fully expect our A/C costs to rise. The new units will be more efficient than what we have now but we will have more space to cool.

Pinyo – good point. I didn’t consider renovations, only repairs. Renovations often cost much more than just repairs. Renovations often imply “upgrades” rather than just restoring functionality.
Pinyo on September 11th, 2007 6:58 am

Our current renovation project converts the dining room into dual purpose office, den, and guest bedroom. We had to do this because the arriving baby will take over the current guest room.

Since we always have a lot of visitors, this will extend the house useful life for us by another 5-10 years.
Tracking Expenses, Romantic Dates and Cheap Meals: My Carnival Picks » Money and Personal Finance Blog In Silicon Valley on September 12th, 2007 8:15 am

[...] The Costs Of A New Home: It’s More Than Just The Mortgage @ A Penny Closer [...]
home improvement resource(new comment) on March 16th, 2009 4:09 pm

Hi. Your site displays incorrectly in Firefox, but content excellent! Thanks for your wise words
finance advice(new comment) on February 11th, 2010 7:59 am

When considering a new home there are a lot of facts and figures to consider. When looking at houses access if you actually need the house size as if you find a smaller house then the mortgage will be lower and less to pay off. Can you pay the mortgage even with interest rates rise and fall which they do and will you have money to pay utility bills on top of that. Did you find the best mortgage rate as there are lots of mortgage rates that are available a lot of websites are dedicated to find the best site for you and comparison websites are good sources for good rate mortgages.
finance advice(new comment) on February 12th, 2010 2:37 am

It is always a good idea to overestimate when it comes to paying your home be it mortgage and utility bills. Mortgage payments will most likely go up and down depending on the interest rates so always make sure you have the monthly payments to pay that and pay it on time so no late fees will be incurred. Paying your mortgage can be the easy part as the house maintenance can be more sudden and something might need fixing or changing anytime depending on the state and age so keep a look out for what could potentially break and need fixing as it could cost more to leave it and repair it later.