Are there expenses you are not considering in your home search?
This isn’t a comprehensive list but this list is designed to get you thinking about potential costs that you may not have considered in your next home purchase.
Hidden Future Costs of Home Ownership
Insurance. Insurance is based on REPLACEMENT cost so even if you get a good deal on the PURCHASE price, your replacement value may be much higher causing increased insurance costs.
You may also want to consider added insurance costs due to a home’s location. Both for the home and you vehicle.
Taxes. If the assessed value is much lower than the purchase price you should expect your taxes to rise the following year. The assessor will see that higher sale price/ value and it will adjust the assessed taxable value.
While we are on taxes, pay attention to things that may result in assessments – like road repairs and school improvements.
Commuting costs. Gas costs money. Longer commutes cost time.
Daycare costs. The cost of daycare can vary by location and if you have have the longer commute, you may be paying longer daycare hours.
Local amenities. Grocery stores, health clubs, etc. Upscale stores will have higher prices.
Green features. Have energy efficient appliances and lighting as well as good insulation will reduce utility costs. Having a quality sprinkler system with rain detectors will help save on watering bills.
Structural and major mechanical concerns. The foundation, the electrical system, the plumbing… those type repairs can dig deep into your pocketbook. Please consider these items higher priority on your search list than say granite counter tops, stainless steel appliances and hardwood floors.
Home maintenance. Make sure you keep 1-3% of the purchase price in saving for annual home maintenance. Stuff wears out. Stuff breaks. Even if you don’t think it needs to be fixed, chances are a buyer will want it fixed when you go to sell the house.
Outside maintenance. OK folks. This is Minnesota. We are lawn mowing, leaf raking, snow shoveling commandos. You will need supplies to take care or your yard or you will need to pay someone to do it. Both cost money. Or you could live in an association that you pay to do it…
Association Costs. The dues that you pay will go up over time. It’s a given. As the cost of maintenance and insurance rise, so do the dues. If the common grounds need renovation or there is a big storm, you may have an additional assessment.
Resale Depreciation. Most people don’t expect their home to go down in value but it can happen. Talk to a local, skilled agent about the potential for your home to depreciate.
I am not going to get into mortgages in this article but there are a lot of considerations around the type of financing you choose as well.
Again – not a comprehensive list but things that could make the budget tighter after you move in so they are definitely worth considering in advance.
Always have some room in the budget for additional unplanned expenses that pop up.
More questions about home shopping? We can help!
Contact us here at Call Sarah First!