COST OF OWNERSHIP-

 

You've saved for the down payment, factored in closing costs and prepaid expenses, and are finally ready to buy your new home. Or are you? The true cost of owning a home involves more than just transactional fees and the monthly mortgage payment. To prepare fully for the financial commitment of homeownership, it's important to plan for the other expenses that will inevitably arise, such as maintenance, utilities, and home furnishings.

 

Maintenance

 

Performing routine maintenance and repairs is essential to preserving the investment you've made in your home. Small problems that don't seem worth the money to fix can turn into big, expensive problems down the road. The cost of dutifully maintaining your home will be less than the cost of fixing the problems that are bound to arise if you don't. .

 

Maintenance can be difficult to budget for because you never know what problems you'll encounter. As a general rule of thumb, expect to spend about one percent of the home's value every year on maintenance. Talking to the seller ahead of time can help you get a rough idea of what it will cost to maintain the home. Find out what major repairs they've made, how often they perform routine maintenance on the major systems of the home, and how much these typically cost.

 

Depending on your financial situation, you may find that the cost of maintaining a certain home stretches your budget too far. If so, it's best to find this out ahead of time instead of later on when repairs are breaking your budget. Talk to the seller, consider the age of the home, and use your home inspection to help uncover any expensive problems.

 

Utilities

 

Even if your home is in good shape and doesn't require much upkeep, it still takes money to keep it running. Utility bills for water, gas, and electricity can be steep, so it's important to budget for them ahead of time.

 

Here again it is a good idea to talk to the seller. Ask for copies of previous utility bills, being sure to collect information from different seasons. Even if you've lived in the area for a while, it is important to learn what the costs are for that home because of variations in insulation and types of fuels and heating systems. Homes in hotter climates may be expensive to cool in the summer, and likewise for heating cold-climate homes in the winter. If you want more information than the seller can give you, ask the local utility companies for estimates.

 

Furnishings

 

If you already have enough furniture and house wares from your previous residence to fill your new home, then congratulations, you've eliminated one major expense. But if you're like most homebuyers, you will probably want some cash on hand to cover furnishings. First-time homebuyers who only have an apartment's-worth of furniture especially need to consider the cost of outfitting a home.

 

You may end up buying a great home that just doesn't quite have the look you're after. If you think some redecorating may be in order, make sure you plan for the expense. Even if you don't anticipate a large project, costs can add up.

 

 

 

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