Know your costs over and above your mortgage payments
If you are planning on buying a house, make sure you have an understanding of all your costs. Below we have listed common costs that sometimes are missed when making a decision to purchase a home and some helpful hints to help minimize these costs if you decide to move ahead with your purchase.
Real Estate Tax
What is it? An annual tax based on the value of your house and can be as much as 2%.
Savings Tip. Most counties send you a home value statement every two years that your real estate tax is based on. When you receive this statement, reach out to a realtor for comps to see if you can protest the value and lower your tax base.
What is it? Covers your property contents, liability, flood and wind.
Savings Tip: Work with your agent to make sure you have the correct home value and coverage (watch out for the extras that sneak in!) as well as thinking about the right deductible to minimize your premiums
What are they? Some communities have monthly fees to maintain the neighborhood/building that can be substantial.
Savings Tip: Unfortunately unless you don’t live in that location, there is nothing you can do to save on these fees.
What are they? There is always the unexpected breakdown with air conditioning, washer/dryer, kitchen appliances, etc. that you should maintain a ‘slush’ fund to cover.
Savings Tip: Home warranties can be a good way to cover yourself against a major expense but make sure you research the company as some home warranty companies provide much better coverage than others.
Wear & Tear
What is it? Houses go through normal wear and tear and things eventually need to be replaced like your roof, major appliances, hot water heater, air conditioning system, etc. these costs can be substantial.
Savings Tip: Similar to the Repairs costs, Home Warranties can be a help with wear and tear items. In addition, if you are purchasing a new home, a good inspection can often get you money as part of your purchase deal to put aside for these items.
What is it? A house needs tender loving care to maintain its value. These items include things such as: pest control, lawn care, painting, cleaning, air filters, etc.
Savings Tip: DIY projects are a huge savings here. Watch to see what workers do when they come to do maintenance on your home and ask friends and family that are handy to help teach you how to tackle certain tasks.
Home ownership is a wonderful thing but you need to know all of the costs associated before purchasing a home so you limit your surprises!