Buying a home is one of the most exciting times of anyone’s life. Possibilities seem endless, and options abound. It’s fun to navigate factors – would you sacrifice the yard for wood floors? Or should you go with more square footage? Each decision you make will cost you though since there’s a limit on what every homebuyer can afford.
One of the things you should consider when shopping for a new pad is how much “home” you can afford. When determining this number, it’s crucial to factor in monthly costs aside from the mortgage. Home fixed costs include utilities, upkeep, HOA fees, insurance and property taxes.
“Each home has a different set of fixed costs,” says Holly Grate, a successful real estate broker in Washington, DC’s prestigious suburbs. “Understanding them before you purchase will be greatly beneficial to your bottom line.”
According to Grate, a laundry list of utility bills should be considered when looking at each prospective home. “Be sure to check with the current owners of the home about the cost of gas, electricity, and water,” she says. “Our home has a well, which saves us on the water bill but also boosts our electric bill as it costs to run the well pump.”
Inquire about the availability of garbage removal and recycling. What type of cable and internet are provided? Will you be utilizing a home phone? How is the home heated in the winter, and cooled in summer? Is the answer going to cause you financial problems later? Be thorough!
If you’re in a city, parking will be a monthly cost you cannot avoid, and you may even need to tip a doorman, depending on what kind of place you’re buying. The other extreme would be country or wooden homes that may need regular extermination treatments.
It’s unreasonable to expect a home not to deteriorate throughout the years, and since it’s impossible to plan for what exactly will break down and when, you should plan to put aside a little money each month so you’re ready for anything.
If you’re considering a home in a planned community, or even a condo or townhome, there will be an association fee. “Seeing this monthly fee can be intimidating,” says Grate. However, considering what the fees cover is beneficial. “We lived in a community where the HOA fees seemed quite steep until we discovered they included access to a world class gym, indoor pool and covered tennis courts.” Decide what’s important to you and if it’s worth it for your particular lifestyle.
If you’re doing the “no more renters’ insurance” dance, it may be premature. Depending on how much down payment you’re able to put toward the purchase of your home, you may be contracting a few hundred bucks each month away to Private Mortgage Insurance.
According to Grate, if the home you’re considering is in the very best school district, your property tax bill will likely reflect that. Be sure to consider the size of your home as that will often affect your property tax bill as well.
If the typical home fixed costs listed here have you discouraged, take heart. It’s much better to realize the true monthly amount of what your dream home costs long before you’re liable for the amount. Stress, relationship problems, and even health issues can result from getting into an agreement that you cannot afford. It’s much better to calculate home fixed costs early in your shopping process when you’re still determining how much “house” you can afford.
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