Owning your own home is the great American dream, right? The truth is that it can quickly become a nightmare, if you do not budget for the expenses that are often forgotten about when a property is purchased. Many people focus on their monthly mortgage payments, but they are only part of the story. Failure to recognize this can lead to serious problems down the line.
So, what are these forgotten expenses, and how can you budget for them and make them as affordable as possible? Here are four of the most common.
Property taxes continue for as long as you own your home. They are paid to the town or municipality and the rate is also decided by them. You should not forget about having to pay the property tax on your home as it’s a lot of money to find at one time, without budgeting; higher property taxes can be around $1,000 each month.
Sometimes property tax is paid with the mortgage, so is less easy to forget. Other times it’s paid separately, either annually or in installments. If this applies to the property tax for your home, it’s a good idea to create a household budget that removes the monthly amount required before you start, so that you know the money will always be available when needed.
Insurance is a cost that many home purchasers forget to consider, and it can be high, depending on several factors. For instance, you may assume that new properties attract the highest insurance premiums. This is not necessarily the case. In fact, newer properties may have better safety features and their wiring is up to date, so insurance premiums could be lower than for an older property.
When you are looking for property insurance, it’s best to shop around to make sure that you get the best value for money. Even if you already have insurance in place, getting quotes can help you find a better deal than you’re currently getting.
Repair and maintenance
You want to protect the investment you make when purchasing a property. One of the best ways to do this is to make sure your home is well-maintained. Of course, this costs money. Experts suggest putting aside 1% of the value of the property to spend on maintenance and repairs. It’s often a good idea to keep this money in a separate account, so that it’s ring-fenced solely for this purpose.
You can make the most of this money by saving on the amount you have to spend. You can do some jobs, like painting your home, yourself. If you do the work to a good standard, it saves you the cost of having to hire professionals.
Pest control is another important factor that you should not forget about, if you want to protect your investment in property. Pests like termites, mice and rats can cause a whole lot of expensive damage if they are not dealt with. You can save on this cost by taking some pest control action yourself. However, a professional pest inspection every couple of years is a good idea, and you should always have enough money to hand to seek professional help when necessary.
These often forgotten expenses can cause problems if they are not taken into account, so be careful to remember them if you are buying a property.