Buying a home is the largest purchase most people will ever make and understanding how much you can afford before engaging a real estate agent is critical. Having just enough money to pay the mortgage every month sleeping on a futon is not the dream. For some couples the shock value behind the true of cost of homeownership however is not realized until after the closing date. Every homeowner has many more obligations than just a mortgage payment and these expenses need to be factored in to your budget.
“Homeownership is everybody’s dream but nobody wants to be house poor”
What are the most common costs of Home Ownership?
When you think of buying a home it’s tempting to look at a mortgage payment and say “I can afford this” but in reality the total cost of homeownership includes the mortgage, property taxes, insurance and maintenance fees. If you happen to live in some communities there are also condo or homeowner association fees. All of these variables not only add up quick but also count towards your debt to income ratio when qualifying for a mortgage or attempting to refinance an existing home loan.
How much should I budget for outside of my mortgage payment?
This entirely depends on your lifestyle, the type of property, where you live and your prior accommodations. If you have been renting for a while many of the luxuries of living may have been included (or partially included) in you rent payment so you need to create a new budget before buying a home. Some of the most common costs associated with homeownership include:
- Property Taxes
- Association Fees
- Lawn care
- Pool Maintenance
- Pest Control
- Internet Provider
- Water / Sewer
- Garbage Trash Pickup
The responsibility of owning a home is exactly that – a responsibility and just looking at a simple mortgage payment calculator rarely provides you with a full cost of homeownership. Take your time, compare payments and make sure whatever home loan you choose is one you can afford.