Ask the homeowner to show you property tax records for the previous year, or you may be able to look tax records up at your County Government’s website. A majority of people have their property taxes paid by escrow, which allows you a single monthly payment for your home’s mortgage principle and interest, including property tax and insurance. When you qualify for a mortgage be sure that the monthly payment you figure on includes the property tax. Also, count on yearly property taxes going UP, not down, so your expense will increase over the years.
Like property taxes, the mortgage you qualify for does not usually take into account the insurance you will need to carry on that property. Even if you currently carry insurance policies on autos or another property, consider having an independent insurance agent shop rates for you across multiple companies. Insurance companies adjust rates every year and you may be able to save hundreds or even thousands of dollars a year price-shopping.
If you live in a subdivision, townhouse or condominium, you may have an HOA fee. This fee usually covers to cost to maintain shared space or grounds. If the property you are interested in falls under the jurisdiction of an HOA, make sure that you are aware of not only fees due to the HOA, but also any rules or guidelines affecting the property. Some HOAs extend their reach into very specific details about a property and govern what color a property may be painted, what decorations may be displayed, how a lawn must be kept, how a property may be used, the number of people allowed in a property, etc. Know what you are getting into before you purchase a property governed by an HOA.
Before you purchase a home ask the owner to provide you with a 12 month utility bill history for the home you are interested in. This should give you a good idea of what you can expect to spend each month on gas/electric bills. Also, don’t forget water, sewer, and trash bills! And what about internet, cable TV, or home phone? These utilities add up quickly and almost NEVER go down. Count on the cost of your utilities steadily rising throughout the years you own the home.
Maintenance and Upkeep
The house you bought may look beautiful now but it will not stay that way if you fail to take care of it. Do you plan on mowing your lawn? If so, you need a lawnmower. Are you going to shovel snow off of your 50-foot driveway or purchase a new snow thrower? Who is going to re-stain your deck? Your floors look wonderful, but you are going to need a nice vacuum cleaner to keep them clean. What about re-sealing the tile in your bathroom? And the caulking around your windows is getting old, letting a draft in. These are all examples of either labor or upkeep costs your will incur. If you fail to maintain your home it will not only become less comfortable to live in, your home will also lose value. Plan on focusing some of your time and money each year on maintaining your home.
All major systems of your house – electrical, plumbing, heating/cooling, roof – will all at some point need repairs. When your furnace stops working in the middle of winter how will you pay the $800 repair bill? Or what about when the hot water heater goes out? You should keep $1000 in an emergency repair fund for your home at all times as unexpected repairs are inevitable.
Furniture and Decoration
Do you already have furniture to fill your new home? If not, take a little time to shop for furniture before purchasing your new home. You may be able to afford a mortgage payment on that 3500 square foot home but filling it with furniture may cost tens of thousands of dollars, not to mention the increased cost to heat and cool it. What about art work to decorate your home? And you wanted new paint, too. These improvements all cost money, so be prepared.