10 Apr How to Calculate Expenses and Prepare for Home Ownership
Home ownership is about so much more than a monthly payment. You need to think about the additional expenses that home ownership entails before you can truly prepare for taking on this huge responsibility. Look at what you can expect to spend when you own a home, so you will be ready when you sign on the dotted line and finally move into your new home.
When people think of home ownership, they often forget all about taxes. You should always find out how much property taxes are going to be before putting an offer in on a home. They’re usually right there on the MLS listings. You will see the yearly cost for the taxes. Simply divide it by 12 to find out what you will owe each month. Then, add it to your budget.
You also need to consider that taxes will likely go up in time, so what you owe this year might be less than what you owe next year. If you’re barely going to be able to pay the taxes this year, it’s probably best to find a different property, so you aren’t stretch too thin when they go up.
Home insurance is a must-have item, and it can be expensive, depending on the cost of your home. As a rule, you will pay around $35 each month for every $100,000 of the home’s value. That means if your home is worth $200,000, you will pay $70 a month.
That is just a general rule, however, and other factors will make the cost go up or down, including the city and state the home is located in and the insurance company that you choose. Even your credit could have an impact on your insurance rates. Get a quote before you buy the home, so you will know what to expect.
Repair and Maintenance Costs
As a renter, your landlord has handled all of the maintenance tasks for you, but when you sign your paperwork at closing, you are on your own. You can expect to pay 1 percent to 4 percent of the home’s value on maintenance each year. Of course, you could end up spending much more one year and much less another year. Factor in potential maintenance costs, so you will be ready to pay the maintenance person when the time comes.
You also need to think about what you might have to replace through the years. Everything from air conditioners to roofs might need replacement, so you need to have some money ready just in case.
Moving from an apartment to a house is quite a change. You will likely realize that you don’t have everything you need. You will need more cleaning supplies, and you might even need to get a bigger vacuum cleaner. In addition, there is a good chance that you need a lawn mower and a string trimmer. Figure the cost of supplies into your budget to make sure you can pick everything up when you move in.
Making the Home Your Own
This is something people tend to forget about. When you move into a new home, you want to make it your own. You will need new curtains, doormats, and all of those extras that turn a house into a home. Take the time to figure out what you will need, so you will be ready when the time comes.
Moving into a new home can be expensive, but you can eliminate the shock by preparing for it. Write out a budget with all of your costs, and then save up money as needed. Then, you can dive right in and embrace home ownership as soon as you sign your paperwork and move into the home.