Buying a home can be an extremely exciting time for many people, and in order to keep this positive experience going, it’s important to understand your finances. While you might see a home that you fall in love with, if it’s widely outside of your price range, you might come to regret your decision when faced with high monthly payments. This is especially true when you understand that there’s more expenses than just mortgage. Here are the following additional costs you should factor in when deciding your budget.
Depending on the size of your family and the utilities your home uses, the costs of utilities can differ. Common home utilities include: sewage, trash, electricity, and gas. These costs add up quickly, especially for larger families. Other costs include internet and a possible security system.
Your maintenance costs might act more as an emergency home fund depending on the condition of the home. Ideally, monthly maintenance won’t be a necessity. However you should try to save some money each month in case there is an issue that pops up in the home that is not covered by homeowner’s insurance.
You might be looking at a home in a neighborhood that has a strong HOA. While each HOA is different, you might have to pay fees ranging from as little as $50 to as much as $300 or more. The good news is that higher fees usually mean you and your neighbors are contributing to a clubhouse, a pool, or a fitness center. So you definitely benefit. Furthermore, your HOA fees might include the payment for trash and recycling, possibly water, and sometimes even weekly or biweekly landscaping.
Updates and Renovations
If you bought a home that you’re planning on fixing up, the costs of renovations may add a monthly cost as well. Many people decide to put the price of their renovations on credit cards with low APR, but this of course, still results in a monthly payment. Make sure to talk to multiple contractors to shop around for a quality and price of service that fits right with you.
Buying a home is an exciting process. Make sure you talk to your real estate agent and your financial advisor about a budget that makes sense for you and your expectations of a home. Getting a clear budget will help you make confident decisions and guide you to your next home. If you’re looking for a good place to start you can find many helpful tools on the internet, such as Nerdwallet’s calculator. Make sure to also fully utilize your real estate agent, as they’ll be able to help you figure out the true cost of the home you’re looking at.