Have you ever wondered why real estate experts insist you don’t buy more house than you can afford?
Could it be because of the hidden expenses homeowners often forget?
Buying real estate is great and kind of exciting. Becoming a homeowner comes with a lot of responsibility, but how great is it to actually own the house you live in!
Often times though, home buyers forget about certain home ownership expenses that could weigh a budget down faster than a sinking ship!
Some of the most common hidden expenses homeowners often forget are affordable. Others though, not so much.
When buying your first home, having a good credit score is not enough to be able to afford the mortgage. There are many other expenses to take into consideration as well.
homeowners often forget
This is a big one, yet many fail to take it into consideration.
When figuring out how much mortgage you can afford, don’t forget to include property taxes into the ‘mix’!
There are many mistakes first home buyers make, but this one can have really serious consequences.
Find out how much you’d have to pay, divide the sum into 12 (months) and add it to your monthly budget.
This way you can save month by month and when the taxes are due, you’ll have your money ready! No need to take out loans, pay penalty fees or panic you can’t afford it.
When buying a home, make room in your budget for insurance as well!
Get an estimate and include your monthly ‘installment’ when calculating your estimated monthly expenses.
Make sure you include natural disasters among your clauses! Insurance companies will charge you a pretty penny for such coverage though.
If you do find your dream home, but can’t afford to pay for insurance, maybe it’s time you look at other houses in a different area.
A significant down payment isn’t enough to guarantee you’ll afford your mortgage. Closing costs, although lower, are equally important to consider!
Typically, closing costs are between 2% – 5% of the total house cost and include fees such as taxes, appraisal fees, credit report charges and so on.
When house-shopping, make sure you afford the mortgage as well as the closing costs.
You find your perfect home and are able to afford paying for your mortgage, property taxes and have good insurance coverage. Great!
But did you also budget for your monthly bills?
Gas water and electricity are a must. Without them, you might as well go live in a secluded forest.
Before jumping head first, see if you can afford to keep up with the costs! Ask the seller for some recent bills, to see if you can handle these expenses as well. We did this before downsizing and it helped a lot to narrow down our choices!
Pay extra attention to how much is costs to heat up the place during the cold season.
As if the above expenses aren’t enough, here comes a long list of maintenance costs.
Renting vs. buying your own home is still an interesting debate. And maintenance costs play a big part in it!
When you become a homeowner, you become responsible for maintaining your property in good condition. From now on, you have to pay for the necessary repairs from your own pocket.
Here are some of the most common maintenance expenses a homeowner has to budget for:
- Roof – Even a single loose shingle can cause serious damage. So if your roof isn’t in perfect condition, you’d have to fix it. A leaky roof can cause all sorts of problems.
- Plumbing – Clogged drains, leaky pipes and other plumbing problems occur even when you least expect it. Just a few weeks ago, my dad had to deal with replacing the burst pipes in the freshly renovated home. Guess who had to pay for the damage…
- Electrical system – Needless to say, DIY when it comes to maintaining your electrical system is a big no, no! A trusty electrician costs a pretty penny, but it’s better to be safe than sorry in order to avoid disastrous consequences.
- Heating and air conditioning – Maintaining these systems is your ‘problem’ from now on. So consider the costs of maintaining them and make sure to replace the filters often, to keep them functioning efficiently.
- Mold problems – Speaking of an efficient furnace, did you know it can actually spread mold around you home like there’s no tomorrow? Prevent mold problems to avoid having to renovate the place: fix the roof to keep the water out, invest in a dehumidifier, etc.
- Pest control – I bet new homeowners just love their new fairytale exterior porch! But termites will be instantly attracted to it if you don’t perform regular pest inspections! Hire an exterminator on a regular basis to avoid termite problems.
- Lawn maintenance – Hiring a professional to take care of your lawn is costly. But doing it yourself isn’t free either! Lawn equipment can be expensive. And the added utility costs as well (watering the lawn uses water, a leaf blower uses either gasoline, batteries or electricity, etc.)
- Miscellaneous repairs – It doesn’t matter how new your appliances are or how recently you installed your new bathroom tiles. Things will eventually break. And it will cost money to repair the damage.
Buying a home is both a stressful and emotional experience.
It’s also one of the biggest expenses many people willingly opt for once their financial situation becomes stable.
Mortgages are one of the very few good debt examples, and they comes with both expected and ‘surprise’ expenses.
Budgeting for both is the smart thing to do when you decide to buy a real estate property for the first time.
Can you think of any other hidden expenses homeowners often forget about when buying their first home?