4 Things to Budget for When You Buy an Older Home
Older homes may have plenty of charm -- but they can also require plenty of work.
- Some home buyers like the look and feel of an older home.
- While you might spend less to buy an older home, you could end up incurring expenses that outweigh your savings.
Some buyers prefer modern homes -- those that look updated and come with new appliances and fixtures. But some buyers prefer older homes -- properties with charm and character.
There are several benefits to buying an older home. In some cases, you might get to enjoy decorative features that can't be found elsewhere. Often, you'll pay less for an older home than a similarly sized newer home in the same neighborhood. The result? Lower monthly mortgage payments to cover.
But while you might save money on the purchase of an older home, over time, you could end up spending a fair amount by virtue of owning that property. Here are four specific expenses to budget for when buying an older home.
1. More maintenance
As homes age, they can become more expensive to maintain. As a general rule, you should expect your home maintenance costs to amount to 1% to 4% of your home's value. But if you have an older home, your expenses might easily hit the high end of that range.
Say you purchase a home with original hardwood floors. You may need to sand or buff those floors more often than newer ones if they're so old they haven't been treated with the protective coating today's floors might come with.
2. More home repairs
Older homes don't just require more maintenance. In time, certain systems can break down, resulting in costly repairs.
Boilers, for example, only last so long. The same goes for air conditioners. Replacing these items could get expensive, so if you're going to buy an older home, you should not only budget for repairs, but also make sure you have a solid emergency fund. That way, if you encounter a multi-thousand-dollar repair, you won't necessarily have to land in debt to cover it.
3. Higher utility bills
Many of the appliances being installed in newer homes are more energy-efficient than their older counterparts. If you're buying an older home, you may have to spend more to heat and cool your home than you would with a newer home. And if your home doesn't have low-flow faucets, you might spend more on water bills, too.
4. More upgrades
Dated appliances can cost you money in the form of higher utility bills. But also, they may not be as convenient or functional as newer ones.
Imagine you buy an older home with a tiny washer that can barely fit your family's clothing, or a dryer that's so inefficient it takes three cycles to do its job. Those are appliances you might need to update sooner rather than later. Similarly, an older home may not come with a dishwasher. If that's an appliance you feel you need, you'll have to pay to have one installed. Make sure there's some room in your budget for these types of upgrades.
Buying an older home could give you a chance to own a unique property that stands out from the rest of the homes in your neighborhood. Just be aware of the costs you might face if you're going this route, and budget for them accordingly.
Our Research Expert
We're firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers. The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.