Hidden Home Costs

May 4th, 2015 | by: SM SOLD | Posted in : New Homes, Real Estate Tips, Local News

Buying a home is a daunting task. After all, it’s one of the biggest purchases you’ll make in your lifetime. Unfortunately, there are also many peripheral costs that will most likely be added to the investment. Closing costs, home-inspection fees and insurance can easily take you by surprise if you aren’t budgeting for it. It’s important to take all the costs in stride and factor all the possible variables into your budget. You’ll be saving yourself a headache later. Here are some costs to be aware of!

Interest Rates on Mortgages

The primary cost you’ll need to consider is your mortgage payment. When choosing a mortgage, it’s important to consider your needs. A 30-year fixed mortgage offers a steady rate over the duration of the loan. This is great if you’re settling down for the long haul. If you plan to move however, an adjustable rate mortgage might be better, as it offers lower initial rates. Be aware of the variances in mortgage rates. 1% can add up to quite a bit over 30 years.

Property Taxes

Nothing is certain but death and taxes. And you can count on property taxes to take a sizable chunk of your budget. Your home’s property tax is contingent on a multitude of factors including municipality and home value. On a basic level, your property tax will be your home’s value multiplied by an assessment rate. That luxurious property you’ve been eyeing will carry a higher rate as well. Major home renovations that improve the value will increase the property tax as well.

Insurance

Insurance is great. It’ll make your life more secure, and more expensive.  According to Zillow, homeowners generally pay $35 a month for every $100,000 of home value. That value adds up to quite a bit over the years. Knowing exactly what coverage you are getting from your insurance is important. Though most policies cover events such as fires, theft, vandalism and hail storms, they don’t cover earthquakes or floods. The coverage you’ll want is highly dependent on your area. You’re going to want a policy that fits your needs best so find an agent you can trust. Check with your agent to find out what policy is best for you before committing. Take your time and shop around.

In the event of an accident, you’ll still have to factor in a deductible before your insurance kicks in. $1000 dollar deductibles are common so it’s important to factor in this variable into your budget. Typically, choosing the deductible you’ll pay is a balancing act, as it has an inverse relationship with the premium. If your premium is low, you’re deductible will be high, and vice versa. Find the price you are most comfortable paying and tip the scales in your favor.

Preventive Maintenance

Preventive maintenance is the inspection of your home’s working appliances to identify imminent problems. Naturally, you’ll want all your appliances to be in working order. Preventive maintenance’s importance is heightened; however, because your homeowner’s insurance does not cover broken appliances or plumbing. Therefore, it’s important to correct potential problems early. You’ll definitely benefit from your air conditioning, washing machine, and refrigerator units being corrected sooner than later.

Rate Increases

Homeowner association and waste removal fees may not show up in your price tag. These costs are highly dependent on your area. Homeowner association fees can bring wonderful amenities but are often a long term commitment. Speak with your association to budget the rates several years from now. Waste removal fees depend on the city but typically range from $150-$400. Budget accordingly. You’ll also pay a variety of bills every month and you should always be prepared for fluctuations. You as a homeowner will generally have little control over these contingencies so it is best to prepare your wallet to meet them.

Budgeting costs can be a wild ride but going forth with a plan will make you feel much better. Make yourself aware of every cost that could affect you and you’ll be able to breathe easier and enjoy your new home to the fullest.