Deciding to buy a home is a huge step that you need to be certain you’re financially ready for. Along with the obvious costs of the down payment and the monthly mortgage payment there are many other aspects of home-ownership for which you would be financially responsible. When you’re simply renting a place it’s easy to overlook these additional costs as your landlord would be the one responsible for them, and they would be built into the cost of your rent. Make sure you’ve budgeted for the following when trying to decide if you can afford to buy a house:
Maintenance and Upkeep
Any time something breaks in a home that’s all your own it’s entirely up to you to pay to get it fixed. There would no longer be a landlord for you to call to fix it. In addition to any breakages that may occur you will also be responsible for paying for the upkeep of any lawns or pool areas that you may have. Paying professionals to do this for you can greatly add to your monthly costs of home-ownership, but even if you choose to do these things for yourself you will still have the costs of purchasing the equipment and the time it would take you each week.
Every year that you own your home you will have to pay property tax. This tax is based on where your house is located and how much it is worth, so it might fluctuate a bit each year. Having a general idea of how much you would have to pay annually on a property you intend to purchase is an important budgeting factor before buying.
Furnishings and Renovations
With the excitement of buying a home you might want to purchase some new furniture items to pad out your new space. This, along with the cost of decorating your home to suit your tastes, can really add up. In addition, any home that you haven’t designed yourself probably won’t be perfect for your specific needs, so down the line you might want to do some renovations. While it’s nice to have the option to change your house however you want, it comes at a significant cost.
If you have a mortgage you’ll be required to have enough insurance to fully cover the cost of your home should a disaster happen. However, you might also need to pay for flood or earthquake insurance as these won’t be included in regular packages. Taking out life insurance on yourself, so that your family doesn’t lose the home if something should happen to you, is also an important thing to consider.