8 Reasons You Shouldn't Clean Out Your Bank Account at the Closing Table

8 Reasons You Shouldn't Clean Out Your Bank Account at the Closing Table

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Anyone who's buying their first home has probably gotten used to stalking their bank accounts leading up to their closing making sure they're beefing up their savings for a down payment and closing costs.

According to Zillow, the median price of a home sold in America is $230,800. Putting 20 percent down on that home will cost you $46,160. Factor in about two to five percent of the home price for closing costs, ($11,540 for five percent) and you're easily down about $57,700 before you've stepped foot into your bare home. Sure, you're trying to get to the 20 percent mark in order to avoid paying private mortgage insurance (PMI), but if you don't factor in other costs you'll accrue in the coming weeks and years, you might be biting off more than you can chew.

Read on to assess whether you'll still have money left over for the things important to you after closing, or if perhaps you should be looking for a lower-priced home in order to make sure you can still maintain your lifestyle and have a beautiful space of your own.

1. Factor in your new bills

"A lot of people don't bother to ask themselves what it will actually cost to live there," says Jean Chatzky, CEO of HerMoney.com, financial editor at NBC's "Today Show" for 23 years. Talk to someone who has a place similar to yours, whether it's a house or a condo, that's around the same size, in your neighborhood or building, and ask them to share their costs for heat, electricity, cable, and water. "Learning about the other associated expenses with buying this home can be eye-opening," says Chatzky.

2. Consider decorating expenses

It's important to add personal elements that will turn your house or condo into a home. "Making the home yours costs money whether you're talking about paint or a trip… to buy all new furniture," says Chatzky.

"While purchasing a home is a big investment, it's important to budget for the items that you'll need to fill your home," says Tina Rich, NYC-based interior designer. "Filling your space with furniture and accessories you've selected and love is what makes a house a home, so it's important that you don't clean out your bank account before you close."

3. Decide which furniture you'll need first

"The best investment you can make is a quality bedroom set," says Michael Robinson, furniture designer at American Modern Collection. "Granted, I have a biased opinion since I design bedroom collections." He says that when people buy a high-quality bedroom set, they can have it for 25 years. "We're a society that's used to getting rid of stuff often and I think many often lose perspective of what quality actually is and why people used to buy quality products," he said. Can you get a discount bedroom set under $1,000? Sure. But it won't likely be made from solid wood and built to last. Robinson says the Amish-made, wooden bedroom sets he designs for his company start around $5,000.

This is where you should think about what you can make do with and are willing to replace in a few years, or whether you want furniture that lasts a few decades. If you like to entertain, you might decide that a sofa is where you want to spend your money, or perhaps a dining room set. Research these prices and decide which items you want to splurge on as a quality investment right now, and which pieces you don't mind getting second hand or cheap in order to fill your home.

4. Factor in paint costs

Whether you're moving into a slightly larger condo or tripled your living size with a single family home, you'll probably be painting it at some point. According to HomeAdvisor.com, hiring a professional to paint an average sized room (10 feet by 12 feet) costs between $380 to $790. Should you choose to paint a room yourself, paint will cost anywhere between $30 and $60 per gallon for a high-end brand that comes in three different finishes: flat, semi-gloss or high-gloss, according to the experts at HomeAdvisor.com. Most rooms will require about two (gallon) paint cans. You'll also need about two cans or primer ($7-15) for each wall so you're looking at about $140 per room before you buy supplies.

"I'm a fan of HGTV Home by Sherwin Williams because of its quality and it has a nice color range," says Rich. "While there are always areas to save during a home renovation, paint isn't one of them. Using a high quality paint—rather than an inexpensive brand—is crucial so your walls look professional and polished."

5. Set aside money for window treatments

You're excited to have rooms with beautiful natural light, but there are probably quite a few rooms in your new home that you'll need to cover for privacy and protection from the sun. Not only do people often forget to set aside money for window treatments—whether that's blinds, shades shutters, and curtains—they forget to factor in things like pets' claws and children's safety when purchasing these items, Robinson says. He recommends Hunter Douglas as a brand he sells through Unique Interiors in Cherry Hill, New Jersey. They'll come out and measure each window properly to ensure you get proper-fitting blinds that are best for your home and tastes. Faux wood blinds are the most popular window treatments he sells for Hunter Douglas these days. An average price point to cover a 36-inch by 60-inch window with faux wooden blinds from that company will set you back about $200. For comparison, the cheapest faux wood blinds we found at Home Depot are about $13 and cheap shades are around $7. Granted, those cheap versions won't likely last long. This just goes to show, even if you don't plan on spending a lot of money on window coverings right now, you'll still need to set aside money for the very basics in your new home.

6. Plan for outdoor home costs

If you're moving to your first house from an apartment, condo, or townhome, you might need to invest in a snow blower for your first winter there. (Consider looking for a certified refurbished one to save money.) You may need a new lawn mower, weed wacker, or a sprinkler system for your lawn. Have a front patio or back deck that needs furniture and an umbrella? That'll be a few hundred dollars. "Are you comfortable allowing things to look wild and beautiful, or do you want everything manicured beautifully every single month?" asks Chatzky. She suggests talking to a new neighbor about pricing. You could say: "Your landscaping is beautiful. Do you mind recommending the person who does it? Oh, and by the way, how much does it cost?" she suggests.

7. Account for moving and assembly costs

Make a list of what you're taking with you, what gaps you have, and do some shopping ahead of time so you can figure out what these items are going to cost, suggest Chatzky. If you're shopping at IKEA or a store where the furniture needs to be put together and you are not capable of doing that yourself, you're going to hire somebody to do it, so how much is that going to cost? How much are the shipping fees? How much is it going to cost to have it moved? Whether you're renting a moving truck and doing the move yourself and with friends, or hiring professional movers, you'll be spending anywhere from about $200 to over $1,000. (Based on large truck rentals at uhaul.com, factoring in gas and mileage and taxes.)

8. Prepare for home maintenance costs

"Your home inspection is a good road map to the expenses you're going to have in the near future and you should pay close attention to that," warns Chatzky. Harvard research shows you should plan on spending one to two percent of the value of your home every year on maintenance, says Chatzky. "Even if you don't spend it in year one or year two, you're likely looking at triple the expenses in year three."

Now that you have an idea of the types of costs coming down the pipeline once you scrape out your savings account, budget for them in advance.

"Think about how you're going to use the place, how you're going to live in the place, and what it's going to cost you to get it into that particular kind of shape you want it in," says Chatzky.

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