Becoming a homeowner can be an exciting time in your life, and it’s certainly a milestone to be celebrated, but it’s more complicated than renting one. There’s a ton that you need to know to be prepared for your first year of homeownership.
Here’s a guide for your first year in your new home, assuming you bought your house brand new from your home’s builder.
[READ: Should I Buy a House Now or Wait?]
Acclimating to Your New Home
Moving into your new home will likely be one of the most exciting (and exhausting) days of your life, but a lot of people take the excitement a lot further and plan projects for their brand new home. Some projects make a lot of sense to do right away — especially essentials that builders tend not to install.
“Builders put money into critical selling features and frequently skimp on items that are not eye candy,” says Jeff Lichtenstein, owner and broker at Echo Fine Properties in Palm Beach Gardens and Stuart, Florida. “Landscaping, for example, is important for curb appeal and your own enjoyment. It also impacts views from inside the house and helps with privacy. Window treatments, indoor lighting, chandeliers, outdoor landscape lighting, pool and pool features, closets and other organizational built-ins throughout the house are rarely done by the builder.”
Although you may want to personalize your home from top to bottom right away, it doesn’t always make sense to do so and can end up hurting you financially in the long run.
“I had a client a couple months ago who bought a new construction home,” says Jo Ann Bauer, associate broker at Coldwell Banker Realty in Scottsdale, Arizona. “She immediately repainted the entire interior, put in higher quality flooring, added designer chandeliers, tile features in the bathrooms and upgraded the kitchen, all in the first few weeks of ownership.”
Bauer warned her client, who was a designer, that her significant investment would likely not pay for itself even in the midterm, but the new homeowner wasn’t concerned. “For most buyers, over-enhancing their home in a new-build community could cause them financial heartache when they turn around to sell and there are no homes of comparable value in the neighborhood,” Bauer says.
Even if you don’t plan any big changes, it can take a while to get a good sense of how your home flows and how you’ll use it.
“I urge homeowners to wait on doing any major upgrades or renovations until they have lived in the home for at least a year,” says Jennifer Beeston, senior vice president of mortgage lending at nationwide lender Guaranteed Rate.”I have personally made that mistake, and I can tell you from experience that what you think will be great for the house on day one is very different than on day 360. Live in the house and really get to know the house before you do any major renovations or upgrades.”
[10 Home Renovations Under $10,000]
Year 1 Expenses
Owning a house means committing to a certain amount of expenses. With a new house, you have the good fortune to be able to start saving money right away for costs that may be years or decades in the future.
“The best thing a new homeowner can do on a long-term basis is open two separate savings accounts,” says Lichtenstein. “One is for long-term items that need to be replaced, like the roof, air conditioning, water heater, and any surprises, like random leaks.” He suggests starting with just $100 per month in your long-term housing repair fund.
“A second account should be set up for style changes,” says Lichtenstein. “You won’t like your kitchen counters and cabinets 15 years from now as they will be old and dated.”
He suggests about 2% of the home’s value be put into this account yearly. If you sell your home without making any changes, that account can be used for other expenses toward your next home.
It’s vital to stay ahead of home maintenance, but taxes and insurance can also creep up on you. Since most borrowers use escrow accounts — which enable property taxes and insurance payments to be collected monthly with the mortgage payment, versus in lump-sum payments once or twice a year — not being prepared for changes in your taxes or insurance can severely affect your ability to make your house payment.
“When buying a new construction home, buyers need to understand that the previous year’s taxes are likely based solely on the land,” says Bauer. “They should anticipate their taxes to be significantly higher.” This is because the value of the home plus the land will be significantly greater than the land’s value alone when the property is reassessed.
[A Home Maintenance Checklist for Every Season]
What About Warranties?
A brand new house also comes with some kind of warranty. Although your home might actually be perfect, most aren’t due to the sheer number of parts involved, so make sure to take advantage of your warranty by seeking professional help.
“I would suggest getting a home inspection while you are in your warranty period so that you can go to your builder with a list of repairs needed before the warranty is up,” says Beeston. “People assume new means perfect, but the quality of the home will depend on the local work crew as well as the materials used.”
It’s important to understand what your builder is actually offering you when it comes to your warranty. You may have many opportunities to have repairs made, so be sure to use them all.
“Many builders will offer homeowners multiple reinspections during the first year, often on a timeline of 30 days, six months and one year,” says Bauer. “For any serious concerns, especially those involving safety like electrical or plumbing issues, contact your builder immediately to find out if the work is covered in your warranty or if you need to call in another professional. Document all minor issues like nail pops or settlement cracks and provide that to the contractor during the reinspection or warranty reviews.”
[READ: Change the Locks! Eight Commonly Forgotten Tasks When Moving into a New Home]
Year 1: Getting to Know Your House
In Year 1, your biggest jobs are getting to know your house and its quirks, and getting your finances in order so you can stay there for the long haul. Watch for any changes that need to be addressed, but don’t stress if you see a few nail pops — that’s what your warranty is for.
It’s also a great time to get to know the neighbors, since you’ll likely be living near each other for a while. Knowing who you can count on in an emergency is critical information, as well as who is just fun to be around on a nice summer evening.
More from U.S. News
Your Guide to Making a Contingent Offer on a House
Buying a Home? What to Know About the Sewer
Places You Forget to Clean in Your Home
Your Home, Year 1: What You Need to Know originally appeared on usnews.com
