How to plan for unexpected new home costs

Essential Tips for Planning Unexpected New Home Costs

The housing market has been pretty volatile the past few years, with the median price of homes hovering around $400,698 in March of 2023[i]. If you've managed to save up enough cash for a down payment and closing costs, congratulations! Being a first time home-buyer is quite an accomplishment.

After the initial joy of purchasing a home has worn off, it's time to start thinking about settling in. With your focus on purchasing a place, some of the additional common costs associated with moving into a house may have slipped your mind. When a move into a new home is on the horizon, it's helpful to keep the following additional fees in mind, as well.

Moving costs

Depending on where you're moving from, you may have quite a few things to take along with you. So, your first question should be: How will you get your things from your current place to your new one?

If a couple of car trips will do the trick, then you don't have much to worry about. If you have furniture, lots of boxes or other heavy items, you might want to consider hiring a professional moving company to help. In that case, it's good to know that the average price for a local move is around $1,500, with additional things like movers' insurance and packaging adding to your total. If you'll be moving long distance, you can expect to spend an average $4,000[ii].

Even if you plan to do most of the packing yourself, materials still add up. Boxes run from $1 to $1.70 for small sizes up to $3.75 for extra-large ones, while bubble wrap runs between $5.97 to $30, depending on how much you need[iii].

New furniture

How much you spend on new furnishings will vary widely depending on several factors like how much furniture you already have, how big your place is and where you shop. Still, the average cost to furnish a house is around $16,000[iv].

To save money here, consider shopping secondhand or at thrift stores, and always wait to purchase anything until you move in. You never know how your current pieces will work in your new space and using what you already have - at least for a little while - can save you a lot of cash.

Renovations

Especially if you purchased an older home, a little TLC may be high up on the to-do list. In fact, 58% of homeowners remodeled in 2022, and the median spend for 2022 renovations was $22,000. That renovation mentality doesn't seem to be going anywhere anytime soon, either: More than half (55%) of homeowners planned projects for 2023 that averaged around $15,000 to complete[v].

Maintenance and repairs

Even if full renovations aren't in your future, your new place may require some repairs to get certain things up and running and, at the very least, it will absolutely require regular maintenance. You probably already expected to fork over some money throughout the year for maintenance, but it might surprise you that, for single-family homes, homeowners should plan to spend between 1% and 3% of the house's value every year in this category alone[vi].

It might be enticing to scrimp here - skip a year of HVAC cleaning or ignore that buildup in and around the fireplace - but that could end up coming back to haunt you in the future when what could have been a small issue becomes a bigger one. Regular maintenance also keeps you and your family safe and could even increase your home value by keeping appliances newer for longer.

Homeowners insurance

If you're coming from an apartment, then you may have already been paying for renter's insurance to help cover your stuff in the case of a disaster or emergency. Chances are, though, moving to a home will mean paying more for a homeowner's insurance policy. The average cost of these policies in May of 2023 was $2,417.10 per year[vii] (compared to an average $15 to $20 per month for renters insurance[viii]). Skipping this cost altogether isn't likely (or smart), since most mortgage companies require homeowners insurance for a loan. It is smart, however, to shop around and ask friends and family for recommendations.

Moving into a new house is a joyful time, but there are a lot of financial considerations to keep in mind. With the big ones out of the way - the down payment and closing costs - you can move onto planning for those extra fees, that way you won't be surprised when they crop up. Personal savings is a good way to cover these, but if doing so would drain your emergency savings completely, a personal loan may be a better way to go. Check out more about Valley's personal loan options here or give us a call.

All loans products are subject to credit approval. Additional terms and conditions apply. You should consult your own tax, legal and accounting advisors before engaging in any transaction. Links to Third-Party Sites. This article may contain links to other websites (the "Third-Party Sites") for your convenience. We do not control the linked websites or the content provided through such Third-Party Sites. Your use of Third-Party Sites is subject to the privacy practices and terms of use established by the specific linked Third-Party Site, and we disclaim all liability for such use. The availability of such links does not indicate any approval or endorsement by us.

For informational/educational purposes only. The information in this content is not advice on legal, tax, investment, accounting, regulatory, technology or other matters. You should always consult your own financial, legal, tax, accounting or similar advisors before making any financial or investment decisions, or entering into any agreement for Valley products or services.

Topics that matter to you