The True Cost of Owning a Home
Your Guide to the Expenses of Home Ownership
Owning a home is more than the monthly mortgage payment.
The first thing you need to know about purchasing a home is how much money a bank would be willing to lend you. Unless you are paying cash, you will need to discuss your finances with a lender and get a pre-qual letter. Banks should gladly provide you with this service for free in hopes of doing business with you in the future. Once you know what you qualify for, the next step is to decide how much you want to actually spend on your home. The true goal is to find a home that is both affordable and that makes you happy.
Your bank pre-qual letter provides you with the maximum amount that a bank will lend to you. It does not provide a full picture of what monthly bills that you will see being a homeowner. So, how do you figure out the difference between that pre-qual and the actual amount you want to borrow? Remember, your monthly payments to the bank will include interest, principal, taxes, and insurance. This is incomplete as there will be other monthly expenses involved in owning a home that need to be taken into consideration.
In different parts of the country these expenses can vary based on cost of living, but many are quite similar. I can help put the question about affording a home in Newburgh NY into perspective for you. While I’m not your accountant, I can assist you with some general information that better explains the true cost of owning a new home. Let me show you a few pointers of what to expect in the Hudson Valley and beyond.
Consider these six additional expenses:
- Routine Maintenance – basic heating and cooling systems require filter changes and cleaning, landscaping, cleaning gutters, plowing in winter, plumbing, replacing light bulbs, and caulking the shower are all part of being a home-owner.
- Utilities – they can be electric, propane, oil or natural gas, along with wireless internet and cable services.
- Water & Sewer – town water and sewer are usually billed four times a year and based on usage. If you have a well, there is no bill, but your well pump is a working machine that may need occasional repairs. Septic systems need to be emptied every few years.
- Trash Removal – while some towns include this service for their residents, many don’t. There is a monthly fee to have garbage picked up at your home, or bringing it to the local dump is an option at a much lower price.
- Repairs – Things break;if you have a new home a builder’s warranty will help out with this for the first few years. Once you are past the warranty period you are on your own. Appliances, windows, doors and mechanical items need attention. There are home warranties you can purchase if you choose to help defray costs of big ticket items.
- Insurance – You will pay the first year up front to qualify for most mortgages. After that the annual fees can be either monthly or paid along with the mortgage. Make sure to know if that is part of your monthly mortgage payments.
Figuring out every single expense is impossible, but this list is a good place to start. Banks only provide you with the highest amount they will allow you to borrow. Only you can figure out what your monthly budget should look like. Since the bank doesn’t take in to consideration how you spend your paycheck each month, you would need to figure in added expenses. A budget should take into consideration things like going out to dinner, dance lessons, a new computer, new furniture and an occasional vacation. Don’t forget saving for college or retirement as an additional expenses. While not all of these are not part of home ownership, they should be considered part of a monthly budget.
For most people, a house is the biggest purchase you will ever make. It should be a reward for all your hard work, and an investment in your future. My goal is to help my clients gain a better understanding of the difference between what the bank allows them to borrow and what they can comfortably afford. Bigger is not always better.
Shopping for a new home has many facets to the process. It can be stressful and confusing. Allow me to show you homes that can work for you. I look forward to helping you find a home that is not only the home of your dreams, but the one you can afford.
How Much Home Can I Afford?
published by: your real estate expert Janis Borgueta as a community service in Newburgh NY. To receive more real estate information please subscribe to “Hudson Valley Homes for Sale”. Looking to buy a new home? Search the MLS for New Homes in Newburgh NY. You can contact Janis at (845)-527-7115 or find her on Google+