Owning a home can be a blessing or a curse. Truly, homeownership can lead to great wealth or great financial ruin. If you're thinking about buying a house, consider these potential expenses before diving in. While you might already be paying for some of these things while renting, it is still important to have an idea of what you are getting into when purchasing a home.
It can be easy to brush off how much money you can spend by paying property taxes – especially if you WANT the home NOW. Property tax can be charged by state, county, or local authorities. It is wise to do your homework before signing on the dotted line, because property tax is one of the most expensive pieces of homeownership.
If you're looking to buy a condo, consider homeowner association (HOA) fees. This is typically a fixed tax to pay for exterior building maintenance and grounds care.
A great way to check on what the property insurance for a residence is would be to check the local tax assessor's office. There, you will find truckloads of information on tax laws that may affect you as a homeowner.
It is extremely important to protect your assets. Your home is probably the most expensive object you may ever own. Homeowners insurance is vital because it can protect you against fire, burglary, and other losses. I highly recommend shopping around for the best insurance available, and be sure to take into consideration this necessary cost.
I remember when we bought our first home. We knew that there would be maintenance costs here and there, but we had no clue how much. Within a year of moving in, we had to replace our dishwasher, dryer, washer, and outside balcony support beam. Thankfully, we had learned how to easily pay for emergencies.
There are many other non-emergency and predictable scenarios that you might have to pay for. Homeowners have to pay periodically for lawn and yard care. This can be a major cost, but the more you do yourself the less you pay. Also consider seasonal costs for pest control. Who wants ants raiding their kitchen? Occasionally you may have to maintain heating, ventilation, and air-conditioning systems as well.
You'll want to make sure to figure out your monthly utilities cost. Utilities can include electricity, phone, gas, and water. You can cut down on your utilities cost by purchasing a reasonably small home. The less rooms you have to heat, light, and power, the less money you spend. Make a list of your utilities and compare it with your budgeted income.
If you're buying a fixer-upper, please don't forget to estimate the cost of replacing the floors, installing new cabinetry, and redoing the landscaping. While you may get a great deal on these properties, the total cost of ownership might be higher than you expect.
Surround Yourself With Knowledgeable People
Buying a home shouldn't be an impulsive decision. Surround yourself with people who know what they're doing, and you'll come out ahead. Realtors can be a great help, but don't stop there. Do you have friends or family who are real estate savvy? Ask them to provide an unbiased opinion. You need someone to tell you if you are getting in over your head.
Real estate is a valuable investment – as long as it is pursued properly. Peter expands on this topic in his excellent article “Buying A New House Is Not Cheap.” Read it for clarification on mortgage interest, down payments, and other miscellaneous charges.
Plans fail for lack of counsel, but with many advisers they succeed. -Proverbs 15:22 NIV
Have you already bought a home? What are some other costs to consider before diving in?