As you begin your quest to find the home of your dreams, make sure you factor in all costs. Otherwise, you may end up with more home than you can truly afford. Your lender will tell you the amount of the loan for which you qualify. Don’t spend that amount! No matter how carefully that number is calculated, they cannot possibly account for all the costs associated with owning a home.
Insurance and Other Consistent Expenses
A significant portion of your costs will occur consistently and at a fairly steady rate. This makes it easy to factor these expenses into your budget. Some examples include homeowner’s insurance, HOA fees, and property taxes. These expenses, alone, will add hundreds of dollars to your monthly payments.
Maintenance and Repairs
Paying to maintain your home to ensure it operates efficiently and shelling out for repairs when something breaks down, which it invariably will, will also cost you. You may be able to budget for maintenance costs, but repairs are another beast entirely. I recommend setting aside an amount each month to build up a reserve. The last thing you want to do is to pull out your credit card to pay for a new heat pump when yours dies in February.
Utilities
If you’re moving from an apartment to a house, you can count on a significant increase in your monthly utility bills. Once you have been in your home for a while, you’ll be able to fairly accurately predict what you’ll be paying for utilities. But, be prepared for spikes in the extreme winter and summer periods.
These are just a few of the plethora of costs you’ll incur as a homeowner. Unless you want to survive on a steady diet of Ramen noodles, try not to spend the full amount for which you qualify.
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