What is the true cost of a house? Calculate this to make a wise financial decision.
Homeownership is the American dream. Having a place of your own as an adult allows you to be independent, live life the way you want to, and feel safe. You don’t have to worry about being told to move, which is the case with renting. There is the danger of becoming “house poor,” though, if you do not carefully count the cost. What is the real cost of homeownership?
The Costs of Homeownership
1. The Mortgage
First, there is the cost of the house itself. The housing prices can vary from place to place; some neighborhoods and regions are more affordable than others. You can get preapproved for a mortgage by a real estate agent or your bank to see what you might comfortably afford.
2. The Mortgage Rate
In addition to the mortgage is the interest rate that comes with having a loan. If you pay in cash, you will not have any interest payment, but generally, this cost is a factor in homeownership. The mortgage rate rises and falls, but you can choose to have a fixed mortgage rate.
3. Closing Costs
When you purchase a home, you will also need to pay for the home purchasing process. There are multiple legal and financial matters to complete transferring the ownership and establishing the mortgage.
4. Homeowners Insurance
Homeowners insurance is mandatory. It can come in handy for covering the cost of expensive emergency repairs or in the unlikely event of a catastrophe.
5. Property Taxes
Property taxes are an added expense when you own a residential property. These taxes may increase or decrease.
6. Utilities
Unless you intend to live off the grid, you will also need to pay for utilities, such as electricity, gas, and water, every month or period.
7. Property Maintenance
Houses and properties break down and grow wild over time. You will need to keep it clean, inspect it, and make minor repairs when necessary. Over time, you will need to budget for replacements and renovations.
8. Emergency Maintenance
Anything can happen, such as a tree root in the toilet pipe or termites in the wall. If something goes majorly wrong with your home, you must have emergency house repair savings ready.
Additional Potential Costs
Mortgage Insurance
Mortgage insurance is only applicable if you take on a mortgage with a down payment of less than 20%. This payment can increase over time and can be combined with or kept separate from the monthly mortgage payment.
Flood Insurance
Flood insurance is mandatory if your house falls within the bounds of a flood zone, as defined by governmental maps.
Home Inspection
Getting a professional home inspection before you purchase a house can help you negotiate the mortgage and prepare for repairs.
Trust the Professionals at Clagett Enterprises for Your Realty Needs
If you’re looking for an experienced property management company, the perfect realtor for your property, or a professional to assist you during your purchase of any home, you can rely on Clagett Enterprises. Clagett Enterprises is a full-service real estate company with over 35 years of experience in the Frederick and Western Maryland area. For assistance with commercial sales, leasing, management, and development and consulting, contact us online or give us a call at 301-665-6009. To meet our team and see some of our beautiful homes, follow us on Facebook and Linkedin.