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Look beyond the monthly payment when considering home ownership


Even with tremendously low interest rates and diminished, buyer-friendly market conditions, owning a home can still be quite expensive.

If you have had your heart set on home ownership as a personal, post-bankruptcy goal, it’s important that you also consider the ancillary costs of home ownership before you make a move based solely on an affordable monthly mortgage payment.

The best advice for would-be home owners is to limit the role emotions have in your buying decisions. Real estate agents see it happen all the time—and so do creditors. Suddenly, your reasonable monthly payment balloons by a few hundred bucks because you believed that one house on the list was the one you had to have, even if it was $50,000 over your budget.

Keep in mind that 30-year mortgages make things seem a lot cheaper than they really are. Those extra dollars really add up. Stay grounded.

Another sneaky expense of home ownership (well, one that not many people consider) is hazard insurance. Required for you to own a home, hazard (home) insurance is just about always factored in to your monthly payment, so it seems invisible. Nevertheless, it’s one of the larger numbers on your closing statement and not something you will find on a lease to a nice apartment.

Unfortunately, insurance companies can also use your credit history as a determining factor in the cost of your policy. Make sure to ask about how occasional credit checks may impact annual rates.

Many people buy a home because of the neighborhood. Many people sell for the same reason. Homeowners associations dues are required to be disclosed to you before you close on your new home. However, few people delve into the specifics pertaining to appearance standards.

The pressure to maintain an attractive home forces many people to spend thousands of dollars every year. It’s easy to simply keep the exterior of your home attractive and reasonably landscaped. But it’s just as easy to hire a landscape architect, a painting team and yard maintenance company. Then, just watch the bills pile up.

Remember, you don’t need to make the cover of Green Grass Monthly to be in accordance with the neighborhood standards. Plus, no one really likes that guy anyway.

Think you need more room? Well, chances are you don’t; but that argument has never stopped anyone who is set on a new sunroom, deck or balcony.

Renovations and additions are always—ALWAYS—more expensive than the initial estimate. In fact, re-read that last sentence aloud. Five times. You may have the most honest, value-driven contractor in the world but somehow, intentional or not, you will pay more than you had budgeted. It is the law of home construction. The single best way to not enter that cost rabbit hole is to never go hunting for rabbits. Or you’ll just end up in home improvement Wonderland.

We’re a few points into this post on the costs of home ownership and haven’t even mentioned one of the largest: property taxes.

When your father or grandfather complained about money and society and how things aren’t like they used to be, the property tax bill is probably what set them off. Like your insurance, you typically won’t see your tax bill until it is already paid because your mortgage company automatically keeps a nice little savings account for you with which to pay them every year. Nice of them, huh? (It’s especially nice for the county and state governments.)

You may not be physically writing the check for your property taxes but rest assured, that’s your money.

Money you could save by renting and waiting for the market to really hit bottom.

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