If you're reading this, I'm earning money. Thanks for helping to feed my family. Please see our disclosure for more information. Also, any advice provided is for informational purposes only. I'm not a CPA, lawyer, or doctor, although my parents wanted me to be all three. So, talk to a professional before acting on anything you read below.
Have you ever considered the true cost of owning a house?
I will be honest. When my wife and I bought our first house, we didn't know. We had no idea.
Sure, we knew all about taxes, mortgage, and insurance. And we heard about emergency funds and having a little extra set aside each month.
But, we didn't know about everything else. You know what I mean. The other little expenses that don't show up on the mortgage documents at the closing table.
What am I referring to? Well, the basic costs of interior maintenance a home like paint, molding, and flooring. Or the cost to keep it nice like mops, vacuums, or trash collection.
Then, there’s exterior maintenance with lawn mowers, trimmers, hoses, shovels, rakes, mulch, flowers, snow blowers, and pest control. And you can’t forget replacing things like the roof or garage door opener.
So, what are new, inexperienced home buyers supposed to do? Well, I have some tips for you to consider as you make your first home purchase. Don’t do what we did. Go in with more knowledge and preparation.
Don’t overbuy. Please, I beg you. Don’t get “as much house as you can afford.”
It’s a fool’s game and I say this from experience. My wife and I bought our dream home in 2011 and had to sell it in 2016 because we bought too much house.
Big homes are great if they fit your budget. But, a bigger home means a bigger mortgage. A bigger home means a bigger utility bill. A bigger home means a more costly roof, more paint, more flooring, and more molding.
Plus, you will need furniture to outfit a bigger home. To lessen that cost, you could head over to a site like Furniture.com and find great options under $100. At least, you're saving yourself some money there!
That said, if you’re a couple buying a home together, I would say buy it on one income. This way, if one of you decide to stay home with the kids, change jobs, or God forbid you’re fired, you can keep the roof over your heads.
You may not completely understand what I mean yet. But, believe me, I speak from experience and not a conceited place.
Whether you buy a resold home or build a new home, you will have maintenance and replacement costs. I repeat: you WILL have maintenance and replacement costs. There is no landlord coming to fix things for you for free. It was all on you after you signed your life away on the mortgage documents.
On average, yearly maintenance expenses can range from 1% to 5% of the purchase price of the home. So, for a $250,000 purchase price, that’s $2,500 to $12,500. That’s a pretty big range, but all homes are different. So, it depends on the age of the home and the condition when you purchase it.
Believe it or not, many people never consider this when they buy. They just go on living like they are still renting or living with Mom and Dad. They don’t realize that homes require upkeep and to keep a home properly costs you plenty of money.
So, how do you prepare for this? Well, you need a budget. I can’t stress this enough.
What do you budget for? I would start with things like a new roof, water heater, and appliances. Depending on the age of the home, those are the first things that my and I would check.
They are big-ticket items that, when they go, they are a direct hit to the finances. They are necessities if you want to keep your home in great shape, so it’s important you’re prepared to replace them. You can set aside money each money for these items and keep them as part of your emergency fund.
How much should you set aside for those three items? Well, the average roof costs about $7,000 to $7,500, the average water heater costs $1,000, and a frugal appliance package costs $2,000 to $5,000. However, check with professionals in your area first. Call around to 2 or 3 and get quotes.
I know most people love fix-it-up and flip it shows on HGTV. I get it. They’re fun to watch. Who doesn’t love a good underdog story where a crap house is transformed into a dream home?
My wife and I love it too. But, I caution you. Don’t be fooled by how easy they make it look.
Consider the fact that they take a months-long project and condense it into an hour or half hour show. Hanging drywall takes time. Painting can take forever.
Furthermore, demolition is not for the faint of heart. And, if you never put in tile work before, you will probably screw it up. I don’t care how easy it looks!
Don’t be a hero and try to do these things to save money. You will likely cost yourself money in the end because you will have to sell it or you will screw things up so bad.
Instead, make small changes over time. Your home is an investment after all. If you want to make money on the resale, you need to do proper updates and make them appealing to buyers down the road. Think resale and what others would find appealing (not just you) as you make your updates.
Don’t go into the home purchase process blind. You must educate yourself.
Also, resist the urge to get down on yourself for not knowing everything. Nobody expects you to know everything. You’re here because you cared enough to read and learn. That’s what matters.
So, ask friends and family who have purchased a home. What have they encountered that they didn’t expect? What do their yearly maintenance costs look like?
Interview real estate agents. Don’t just go with your cousin or a friend. Go with somebody who is educated about homes in your area. If they can’t answer your questions, it’s because they don’t know.
If you’re considering an older home, call some local contractors. Have them come out to the home you want to buy and give you an estimate. Some will blow you off, but some will take you up on the offer.
Buying a home is one of the biggest decisions a person makes in their life. Go in prepared and with an open mind. Be willing to learn and don’t worry about looking stupid. Financial decisions are not to be taken lightly and all questions are valid. Good luck to you in your home purchase!
So, are you buying a home soon? What have you learned so far? Do you already own a home? What do you wish you knew going in that you know now? Tell us below.
Ways To Reduce Inventory Shrinkage From Expired Products
Tips for Reducing Shipping Costs
Habits with Money Should Change as You Age: How to Manage Your Finances Throughout Life
IMPACT INVESTING: A GUIDE TO THIS DYNAMIC MARKET
Tips for Reopening a Retail Business During COVID
Important Life Lessons Young People Don’t Have to Learn the Hard Way
The Advantages of Having a Mobile Business
Online Payday Loans Alberta No Credit Check; A Comparison to Banks
Please log in again. The login page will open in a new tab. After logging in you can close it and return to this page.