Are You Forgetting About These 3 Home Expenses? 18% of Recent Buyers Did
- It's important to incorporate all financial aspects of homeownership into your budget.
- Underestimating your peripheral costs could really hurt you.
If you're going to buy a home, make sure to account for all of the costs involved.
It's no secret that buying a home is a huge undertaking. You need to cover the cost of a mortgage, which, depending on your living situation, may be a greater expense than the monthly rent you're used to paying.
But it's not just your mortgage you'll need to pay when you purchase a home. You'll also be on the hook for peripheral expenses that could wreak havoc on your budget if you aren't careful.
In a new HomeLight survey, 18% of recent buyers said they regretted underestimating their homeownership costs outside of their mortgage payments. And that's a mistake you don't want to repeat. Here are three homeowner expenses you really must account for accurately.
1. Property taxes
Property taxes are a given when you own a home, and unfortunately, they have the potential to rise over time. That's why you'll need to be careful when buying a home with higher property taxes to begin with.
When you're presented with a home listing, you'll see what its most recent property tax bill looked like, and that will give you a sense of what you can expect to pay in the near term. But one thing you should look at before making an offer on a home is its property tax history. That should give you a sense of how often that home's property taxes went up, and to what degree. If you see a sharp rise in property taxes, it could be a red flag your bills are likely to climb through the years.
2. Homeowners insurance
Homeowners insurance is a requirement for getting a mortgage, but even if that weren't the case, it's something any property owner should have. Like property taxes though, homeowners insurance costs can climb over time, making your bills harder to keep up with.
One way to keep your costs manageable is to shop around with different insurance companies before putting coverage into place.You can also ask about steps you can take to keep your premiums to a minimum. Installing certain safety features, like an alarm system, could result in lower premiums. But either way, it's best to assume your homeowners insurance bills will creep upward in time -- even if you don't end up submitting a ton of claims against your policy.
Even if you buy a home in great shape, it will still need to be maintained. And if you don't have the time to do that work yourself, it could get expensive.
You'll need to be realistic about how much home maintenance you'll outsource before making an offer to buy a given property. That way, you can more accurately account for maintenance costs and see how they fit into your budget.
The last thing you want to do is buy a home and wind up in over your head financially. No matter what type of home you're making an offer on, be sure to thoroughly consider the cost of property taxes, homeowners insurance, and ongoing maintenance before you commit to buying it.
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