Costs of Home Ownership

So what are the true costs of home ownership? What should I budget for? There are many things that need to be carefully considered when buying a home, besides just your monthly mortgage payment. You will also have property taxes and homeowners insurance to pay for. Many times these are included into your monthly mortgage payment, but not always. Review your paperwork and make sure you are fully aware of whether they are included or not. Even if these items are included in your monthly mortgage payment the county usually reassesses property taxes every so often and these will usually go up and homeowners insurance goes up every now and then as well. Therefore, make sure that you know whether your taxes and insurance are included in your monthly mortgage payment and even if they are and you have a fixed rate, your payment can go up if your taxes and/or insurance rate increase.

Ask your real estate agent to inquire about the typical utilities on a property you are interested in purchasing. Are there new windows on the home? Inquire about insulation as well.

Maintenance and repairs are the most overlooked items of costs in home ownership. The costs and fees for maintaining your home depend greatly on the age of the home, but a good rule of thumb is to allocate 1% of the homes value as an annual budget. A properly maintained home well be beneficial in the long run when you decide to sell the home and move elsewhere. This will attract more buyers as many wont don't place offers on homes that have been neglected.

There are many costs of home ownership that you experience. One overlooked cost is the transaction cost. If you want to sell your home you will usually have to pay a commission to a broker.

Don't forget about your rent equivalency of ownership rule which states that you should add whatever your equivalent rent would be and add the percentage of your tax bracket to get your true cost of Home ownership.

The cost of home ownership is offset slightly by the tax savings home owners enjoy. As a home owner you are able to deduct interest paid on your mortgage, second mortgage, HELOC and property taxes. With these deductions you may be able to get a larger tax return or have less money with held on your weekly paycheck.

Costs of Home Ownership also weighs on the area you choose to live in. Some bigger, more saturated cities are more expensive than the smaller towns.

» DISCLAIMER: The information contained in this article on 'Costs of Home Ownership' is a collection of contributions by licensed mortgage professionals and is not the opinion of Broker Outpost LLC. Always consult a licensed professional before applying for a mortgage.