When Building Your First Home, Factor In Costs Of Home Ownership
As a first home buyer, many individuals carefully create a budget that they believe will give them a good idea of what they can comfortably spend on house and land packages or a custom finished residence designed by one of the professional home builders in their area. They may take into consideration a monthly house payment versus their lease or rent payments and they may include the cost of a down payment, but for the most part, the average first time buyer leaves out at least two or three important factors that can have a profound effect on their budget and how much house they can really afford.
Future Maintenance And Repairs
Whether you’re looking at house and land packages, an older house that needs some renovations or a brand new display model, your house will need regular maintenance as well as periodic repairs as the years roll by. When you’re renting, the landlord is usually responsible for the bulk of any maintenance or repairs, but once you own your own place, you’re on the hook for anything from repairing or replacing worn or damaged appliances to repairing a leaky roof. Months can go by without any repairs needed, but when they do crop up, they can be expensive. The same goes for maintenance such as painting walls or washing the windows. You can do it yourself or hire someone to do it for you; either way will mean you’ll need to invest in the tools and materials at the least.
Increased Utility Costs
As a first home buyer, you’re probably going to be moving into a space that’s larger than your current rental or apartment. While all that extra space feels wonderful, it does require more power to keep it running smoothly and maintain your comfort. Air conditioning, heating and the cost of running more appliances or using an entertainment system can all add up to a utility bill that could surprise you. Be sure to ask your home builder about the typical cost of heating, cooling and electric for your style of dwelling, including typical prices during both winter and summer months. If you discover that your utilities will cost 30% more than they did when you were renting, add that into your monthly expenses before deciding how much house you can afford.
Various Mortgage Fees
A mortgage calculator can give you a general idea of what your monthly mortgage payments will be, but you’ll need to add in several fees that your lender may charge in exchange for giving you the loan needed to purchase as a first home buyer. These fees may include:
• Mortgage application/processing
• Mortgage establishment fee to set everything up
• Property valuation, particularly if the house or property have been altered or renovated recently
• Mortgage registration
• Stamp duty (if applicable in your territory)
• Lenders mortgage insurance
Obviously, these fees can quickly add up. Fortunately, these are one-time expenses, but they can raise the initial payment or the costs at closing by several thousand dollars.
Property Or Land Taxes
While many land taxes and property taxes have been abolished or revised in some territories, they still exist in others. Be sure you talk to your home builder and your lender about any taxes that may have to be paid when buying house and land packages so that you aren’t blindsided by an unexpected tax.
If your home builder offers house and land packages in planned communities, golf communities or some townhouse developments, there may be a property management fee that will have to be paid on a monthly basis. These fees cover the cost of management and care of common areas and some amenities within the community. These can vary widely, so be sure to ask.
A first home buyer can be intimidated by the many potential costs and fees associated with residence ownership, so do some research and put together a complete budget before making a commitment. Your local home builder can usually answer any specific questions you may have, helping you find a place that you love and that fits your financial situation, ensuring many years of enjoying your new residence.