One of the nice things about living in the same place year after year is the consistency: You know the best routes home from work, how to prepare the place for seasonal weather changes, where everything belongs and how much it costs to maintain everything.
At the same time, the comfort of familiarity isn’t immune to change, and there are plenty of things about your housing situation that can change, even if you keep the same address. To avoid the shock of a sudden increase in housing expenses, anticipate these common shifts and re-evaluate your budget on a regular, frequent basis. If you’re planning to buy a home soon, this calculator can help you figure out how much house you can afford to help you budget from there.
1. Rent or Mortgage Payment
Your rent is subject to change as the landlord or property manager sees fit, depending on the terms of your lease and the tenancy laws in your state. Even if the rent has been consistent for a few years, don’t be surprised if it goes up, because it happens often. When you find out the rent will increase, do your research: First, check your lease and local laws to make sure the increase is legal, and if it is, consider negotiating. If you’re a good tenant who always pays on time and requires little attention from the property manager, you may be able to minimize the increase.
Mortgage payments can go up too, if you have an adjustable-rate mortgage. The interest rate will be fixed for a period of time (depending on the type), after which the rate will reset periodically — for example, some types adjust as frequently as every month — and affect your payment.
2. Property Taxes
Homeowners may see their property taxes increase for a variety of reasons, often because of government budget shortfalls where they live. These taxes are based on your property value, so as the assessed value of your home changes, either because of market shifts or improvements you’ve made to your home, your tax liability will also change.
Depending on what part of the country you live in, you may be all too familiar with fluctuations in utility costs. Climate has a lot to do with it, whether you’re constantly changing your temperature control as the four seasons come and go or if you only get a few months of the year when you’re not blasting the air conditioning in your home in the desert.
On top of meteorologic changes, you have to anticipate economic ones. For example, the price of heating oil soared in late 2013 and early 2014, significantly increasing the heating bills of homeowners in the Northeast, where the largest concentration of oil-heated homes in the U.S. reside.
You also have to think about any special discounts you may have had that are expiring. Oftentimes, when you set up a new Internet package, you get a promotional monthly payment for the first year of service, and when that’s over, you have to pay the “normal” rate.
Any significant value changes you make to your home or the possessions inside it could affect how much insurance coverage you need and, as a result, your insurance premium. Don’t forget to update your insurance, either, because if you’ve fitted your place out with a bunch of fancy new gadgets that weren’t included in your initial insurance estimate, you may not have what you need to replace them if something happens.
Re-evaluating even the most consistent expenses in your budget is an important exercise in maintaining overall financial stability. When you’re not prepared for your living expenses to increase, you strain your resources and may possibly go into debt to make everything work. Racking up debt and damaging your credit score will just make the frustration of surprise expenses worse, so prioritize preparedness. You can see how your debts are affecting your credit by checking your credit scores periodically — which you can do for free on Credit.com.
More on Mortgages & Homebuying:
- Why You Should Check Your Credit Before Buying a Home
- How to Find & Choose a Mortgage Lender
- How to Refinance Your Home Loan With Bad Credit