Homeownership Realities a Year Later: What First-Time Buyers Should Expect and How to Stay Prepared

Becoming a homeowner is a major milestone—one that often brings pride and excitement, but also a long list of new responsibilities. After helping many first-time buyers reach this milestone, we’ve also seen the questions that come later, once the dust settles, and the reality of year-two expenses comes into focus.

Even the most diligent budgeters can be surprised by costs that weren’t front and center during the homebuying process. As you move from the excitement of closing to the reality of day-to-day homeownership, several costs and responsibilities tend to become clearer in the second year. Understanding these early can help you manage your budget with confidence.

Insurance Costs Often Increase After Year One

One of the first surprises some homeowners encounter is an increase in their insurance premiums. During the closing process, the first year of homeowners’ insurance is typically paid out of escrow, creating the impression that the cost is stable. But as the policy renews, premiums often adjust based on factors like rising construction costs, regional claims activity, and the age and condition of the home.

If you’ve made upgrades since moving in—such as renovating a kitchen or bathroom, replacing a roof, or updating major systems—your coverage needs may change as well, sometimes prompting a higher premium.

To avoid surprises, review your policy each year and make sure it accurately reflects your home’s current value. It’s also worthwhile to compare rates and work closely with your insurance provider or lender to ensure your coverage remains appropriate without straining your budget.

Property Taxes Can Change, Sometimes Dramatically

Another common adjustment in the second year comes in the form of property taxes. Many counties reassess homes after they are sold, and this updated valuation can lead to a tax increase that directly affects your escrow and mortgage payment. Even modest adjustments can catch new homeowners off guard if they haven’t accounted for the possibility.

Understanding your local reassessment schedule and preparing for potential adjustments can help smooth this transition. If you believe the new assessment doesn’t reflect your home’s true value, you may have the option to appeal, though the process varies by location.

Maintenance Adds Up Faster Than Many Expect

Regardless of a home’s age, ongoing maintenance is part of the ownership experience. Newer homes may need less frequent attention, but routine upkeep—along with the occasional unexpected repair—is inevitable.

Appliances wear down, HVAC systems need servicing, gutters require cleaning, and landscaping demands regular care. Older homes may bring additional needs, from plumbing updates to roof repairs. While each individual expense might seem manageable, they can add up quickly when several tasks occur in the same season.

This is why it’s helpful to establish a dedicated maintenance budget early on. A common guideline is to set aside one to three percent of your home’s value annually, adjusting based on its age and condition. Having these funds earmarked provides peace of mind and prevents maintenance needs from becoming financial stressors.

Budgeting Strategies to Stay Ahead in Year Two and Beyond

Treating homeownership like a long-term financial commitment is the best way to stay ahead of unexpected costs.

• Create a Comprehensive Budget: Include principal and interest, taxes, insurance, utilities, maintenance, and HOA fees. A full-picture budget keeps you grounded and supports long-term financial stability.
• Maintain a Home Emergency Fund: This fund should cover repairs or system replacements without disrupting your broader financial goals.
• Monitor Your Home Equity: As equity grows, tools like home equity loans or HELOCs can help finance improvements or consolidate higher-interest debt. Used responsibly—and with a clear repayment plan—these tools can strengthen your financial position. However, they should be approached carefully and not used for discretionary spending.
• Review Your Plan Annually: Your income, expenses, goals, and the broader economic environment will change over time. A yearly conversation with your lender can help you stay ahead of adjustments, understand the implications of rate changes, and prepare for any upcoming financial decisions.

Protecting Your Long-Term Investment

A home is often the largest purchase a consumer makes, and staying proactive is key to protecting it. Understanding how expenses shift after the first year, monitoring your loan and equity position, and keeping a realistic budget will help you navigate homeownership with confidence. Before committing to this long-term investment, see what your budget can handle using our Mortgage Calculator.

If you’re unsure what to expect in your second year—or want guidance on planning for future expenses or exploring your home equity options—connect with a WSFS Associate. We’re here to help you build a plan that supports your goals and keeps you comfortable in the long run.