With the mortgage boom in full swing, it stands to reason that you might be dreaming about a new home. However, first time homebuyers need to be aware of the hidden cost of owning that dream home. It’s easy to get your emotions out of step with reality. It’s something that everyone has done in their life, even in the financial sphere of things. But we have to remain vigilant about our finances to make absolutely sure that we’re not running into pitfalls and traps. Being aware of what you can get done and what you’re not going to be able to do is incredibly important.
Make sure that you think carefully on whether or not you’re going to be able to afford these expenses regularly. It’s not like renting a flat, where the landlord is responsible for the things that go wrong. When you own a home, you have to take on all of those lovely costs yourself.
There is a silver lining to this cloud: it’s not just money being flushed down the toilet. You’re building a piece of something great for yourself. It’s something that can be passed down to your children after you pass away. There are tax benefits to owning a home, as long as you’re willing to think through them carefully.
Without further delay, here’s the list of hidden expenses that you need to keep an eye out for while home shopping.
1. Inspection of Premises
A home inspection can be all over the place, and there’s a strong temptation to do this on the cheap. Don’t fall for that trap, because a “cheapie” inspection can overlook some serious problems in your home. You’re a lot better off investing time to find someone of quality to look over the place. Under the inspection part would be the expectation that you’re doing your research on the property. Is it on the site of an old mine? You have to make sure that you’re going to come out ahead on a home purchase.
2. Closing Costs
A lot of potential homebuyers ignore the closing costs associated with buying a home. Don’t fall into this trap either, because closing costs can definitely be pricey. Your lender can give you a decent estimate on what your closing costs will be, so make sure that you have those set aside. Sometimes they will roll the estimated closing costs into your mortgage, but you’re still on the hook for anything that doesn’t get covered.
As we said above, you’re going to be on the hook for everything that you have to replace in the house. So if the roof starts leaking, it’s up to you to fix it with the help of Jayhawk Roofing & Siding. This is where a good inspection comes in. if you have a motivated seller that just wants to get out, they may agree to fix things so that it won’t be an extreme problem for you.
Be prepared for your insurance premiums to go up if you’re going to own a home. You can get a discount for bundling your car and home insurance together. Buildings and contents insurance is still necessary on top of home insurance. The home insurance your mortgage lender requires is just to insure the premises itself against fire or other serious damage. You still need a separate policy for everything inside.
There will be plenty of taxes to pay. Look out for a stamp duty that’s roughly 4% a year. It can really throw you for a loop if you weren’t expecting the expense. The Government definitely makes sure that they get every bit of tax owed to them, and penalties and fees for missing deadlines are huge. When in doubt, seek a tax professional for the most updated information.
It sounds like a lot, but it really isn’t. It’s up to you to make absolutely sure that you can handle the costs of homeownership. The rewards are sweet enough!