In determining a budget that you are comfortable with it’s wise to look ahead and try to develop a clear understanding of all of the ongoing expenses that are involved in home ownership. We include here, a list of those items.
Mortgage Payment - If you are like most people, you probably intend to borrow some of the funds required to purchase a home. Of course, the lender will expect you to repay the debt with a monthly payment that includes a portion of the principal amount loaned, plus interest. Allow your banker or your agent to assist you in determining what you can afford.
Property Taxes - Just when you thought you’d already been paying every imaginable tax, the city springs this one on you. Yes, of course every homeowner pays taxes to the municipality to pay for civic services and infrastructure. The amount of the property taxes typically varies depending on the value of the home.
Utilities - The monthly costs of natural gas, electricity, water, sewer, garbage collection, telephone, and even cable TV have to be worked into the budget.
Insurance - You’ll need a home insurance policy for at least as long as you have a mortgage on the home. Most homeowners see value in maintaining insurance on the property indefinitely.
Condominium Fees - If you are planning on purchasing a condominium or townhouse you will be required to pay a monthly fee called condominium fees. These fees cover the cost of maintenance and insurance for the common areas of the condominium complex.
Home Maintenance - Gone are the days when a leaky faucet could be remedied with a quick call to the landlord. As a homeowner, you will be solely responsible for the upkeep of your home. If something breaks, it’s you that has to fix it, or at least pay for the repairs. Over time, most components of your home will be subject to wear or obsolescence, and consequently need to be replaced. Many people forget to take into account the ongoing costs of home maintenance. In some cases, this will lead to a slow but steady deterioration of the property. As the property goes down hill, so does its value. The owner of a neglected home usually pays the greatest price when they attempt to sell the home. Buyers expect to “steal” homes that are poorly maintained. It’s wise to plan to invest an average of 1.5% of your home’s value in annual maintenance and improvement.
Yard Maintenance - Perhaps you have a green thumb and look forward to caring for your new yard. Maybe you’ve already got more to do than you can handle. If that’s the case, plan to hire someone to keep your yard looking great. Your neighbors will love you! |