There is much newfound interest in homeownership. This does not come as a surprise considering all the benefits that can be reaped from this status. Depending on planning, financial means, and budgeting, this can make a difference between a better financial future and breaking the bank.
True costs of owning a home can be rather unpleasant and nobody wants to own a money pit. So, get your financial house in order before even thinking of owning a brick-and-mortar one.
Every homeowner is under obligation to pay property taxes. The problems arise when the taxes go up and the monthly housing costs increase. Unlike mortgage payments, they fluctuate and make it hard to budget ahead of time. Apart from changes in tax rates, other factors that contribute to this volatility are property assessment and reassessments.
It is estimated that 70% of buyers take out a loan in order to finance the home purchase. The mortgage interest deduction helps, but you still end up paying a lot of money over a long haul. So, use a mortgage calculator to figure out interests and full costs of owning a home. It is also possible to utilize loan repayment calculators from services like Bad Credit Loans and secure the best terms for yourself.
Insurance is an integral part of real estate transactions. Homeowner’s insurance provides basic protection against hazards like fire, as well as thefts, but it does not cover earthquake and flood damage. The amount one pays can vary according to factors, such as construction materials and the location of the home. What is more, insurance costs can increase over time, so it is recommended that you are vigilant.
Furniture and décor
Upon moving into a new home, many buyers tend to invest in at least one piece of furniture or some decorative items. This is understandable since they want to personalize and add character to the newly-acquired space. Still, some of them do not count in this expenditure beforehand or fail to shop on discounts and compare prices.
Utilities may not be considered a hidden cost, but there are some aspects that one does not see coming. Some people do not realize that the increase in square footage packs a big financial punch. Also, there is a matter of energy waste. Today, it goes without saying how important it is to employ energy-saving technology in the form of LED lighting, smart thermostats, water-saving showerheads, and solar panels.
Interior maintenance is a task that calls for an investment of both time and money. It is recurring, predictable expenditure, so preparing the budget is an absolute must. Moreover, maintenance involves a wide array of tasks ranging from cleaning gutters to changing the furnace filters. Although many of these you can handle yourself, for others (cleaning the chimney, for example) you may need to hire a contractor.
On the other hand, repairs often come out of the blue, when you least need them. Some tasks like repairing the roof or sorting out a leaky plumbing system cost pretty penny while fixing loose tiles is not as much of a hassle. In any event, it is highly advisable to set aside a fixed amount of money each month to create an emergency fund. The amount depends on different factors, such as age and condition of the home.
Tending to outdoor areas
Many homeowners overlook the outside dimension. In general, those who have a lawn or garden have some extra expenditures at hand. To carry out landscaping, for example, you do need some expensive lawn equipment, weed killers, pest control, and fertilizers. Landscaping additions and improvements are labor-intensive and the help of a professional is usually required.
This brings us to one final point. Namely, homeownership involves a host of services that people rely on from time to time or on a regular basis. For instance, garbage collection and curbside pickups cost between $144 and $240 per year. Pest control is significantly more expensive, which is also the case with paying a security company to keep an eye on your property.
Doing the spadework
Owning a home is a great privilege, but it is also a huge investment that can bite your budget pretty hard. People put a lot of money only not to see it ever again. The thing with expenses is that they add up over time and drain your finances slowly. So, make sure to buy the home you can really afford and budget for expected and unexpected costs. Do your homework before making a leap. Grasp the full financial picture and make the investment in the property worthwhile.
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