Greetings fellow Fools!I have been reading the board for the past few months,anticipating the moment when my DW and I would start looking for a house.Well the moment is upon us. We are ready to jump in and begin our home search.I have learned a lot from this message board, and the Fool's Buying a Home section.One issue I am having difficulty with is determining how much home we can really afford. The approach I am taking towards this is trying to create a projected budget for our new house. Certain things on our current budget plan will change. Our rent will disappear, to be replaced by a mortgage payment. Our gas and electric bill will likely be higher. We will now be paying for our own heat. There are many other additional expenses. What I am trying to determine is what additional information should I find out about a house before deciding to buy?Here are the questions that I have so far. 1) What are the taxes on this house.2) What are the average electric/gas bills3) What is the average water billSo my question to you Fools is:What are the other monthly expenses involved in owning a home?Excited and Nervous,MadAmos
MadAmos: "Here are the questions that I have so far. 1) What are the taxes on this house.2) What are the average electric/gas bills3) What is the average water billSo my question to you Fools is:What are the other monthly expenses involved in owning a home?"Congratulations on starting your search.A. ad valorem taxes [which youmention] and insurance (often covered by payment into escrow; the TI portion of PITI)B. sewer bill (if not part of the water bill)C. trash collection (depending upon local practice)D. repairs - possibly not every month, but they are bound to ariseE. replacement - depending upon how you categorize repairs, your personal risk tolerance, and the size of your emergency fund (and at the risk of sounding unFoolish, your lines of credit); think roof, carpet and appliances, primarilyF. landscaping and lawn maintenanceG. pool, if applicableH. probably sticking my foot in my mouth, but, if you are married, redecorating (ducking and running, but grinning)Sorry, I cannot think of anything else of the top of my head.Hope this helps. Regards, JAFO
Well, our home improvement budget runs about $150 per month (and sometimes more, depending on what projects we have going on). If you buy anything other than a brand new house, figure in some home improvement money. Another thing to think about in the "how much house can you afford" decision, is if you might want to go to a single income household later. We thought we'd like to keep that option open for when we had kids, so we used only my husband's income when determining the maximum amount of a mortgage. Teresa
Congratulations on a new home.If this is an existing home you can call the utilities companys, give them the address and they'll tell you what the utilities have historically run.I have a new house, so repairs are low. However. I had basically no furniture, so decorating cost has been high for me initially. My crazy girlfriend tried to convince me that whatever the house cost the same amount should be spent on decorating. We went to a parade of homes and found that they spent about 50% of the cost of the house on decorating. And that was for a very lazish decor. So I'm now figuring 20-30% to do a great job decorating. Don't forget about the yard guy and the maid if you're considering having those things done.Good news, I have small parties now where I go to Sams Warehouse and buy bulk chicken, have everyone bring their own beer and a side dish and thus turn a $150 dinner and drinks night into a $30 evening.
The question that comes to my mind is will you have a garage? If so, start thinking about all the things you see in people's garages. Stuff like lawn mowers, snowblowers, patio furniture, POWER TOOLS, work benches, garden hoses, etc. Those things are there for a reason, and they all add up to a lot of money.We built our garage two years ago, and I am absolutely amazed at the stuff we've got stored in there. Stuff we got along without before but now is absolutely necessary to own. We hardly have space to park two small cars, and it's 24x24.My entire house's history can be found within those four walls.elizabeth
I second everything that's been said before (especially the "stuff in the garage" thing! Whew! That adds up fast!). But also don't forget the stuff most people never think about:1. Sundry items that you need when you are just getting started: trash baskets in the baths and kitchen, shower curtain rods, mini blinds or other window treatments, curtain rods, throw rugs, soap dishes for the extra bathroom, fireplace tools and screen, extra lamps because your apartments always had overhead lights, chairs for the patio because you always used the ones by the pool at the apartment....... You would be absolutely amazed at how fast all that goofy stuff that seems so insignificant adds up. 2. Budget in money for maintenance and things. In the 3 years I've been in my house, I have had to replace the AC, I am getting ready to buy a stove and dishwasher, I put gutters on the house (who knew that houses didn't automatically come with gutters? Never occurred to me to notice or ask!). Also pest treatment, cost of having an extra phone line run into your house, putting storm doors on the house, putting up ceiling fans, etc. I wish I had thought more about that kind of stuff before I bought the house and budgeted for it. Even if the house is new, things can go wrong (usually the day after the home warranty runs out, in my experience!!). 3. Don't forget to plan for future repairs. If the house is older and the roof is older, think about when it might need to be replaced. A new roof should last 15-20 years, depending where you live. Will tree roots invade your underground pipes? Stuff like that. Of course, you don't need the money for this stuff up front, but it's helpful to at least think about it and have a plan so you are not caught by surprise when you have an emergency or the Home Depot bill comes and you are appalled.Good luck. I love being a homeowner--honest, I do!!Janet
One other possible expense-- the exterminator-- I live in Florida and the bugs don't freeze here so that is an ongoing expense.Good luck!
A couple of things also to consider with older homes...First, invest in a GOOD home inspector, get recommendations, you want to pay a bit extra if necessary, b/c you want a full structural report w/ recommnedations. This $300 saved us $2500 on purchase price, b/c there was a crack in the heat exchanger, and owner agreed to split projected cost of replacement system (which actually ended up costing us $3000 after considerable shopping around)Is the house on septic system or county plumbing to the street? Many owners of older homes are blindsided by the need to replace/repair septic systems, or collapse them and hook up to county sewage (we're lucky, it happened to our home one month before they sold it. We were renting next door and I discovered the problem!! It cost them $4500)If you plan to "upgrade" the house, get realistic estimates -- and add 20% for 'just-in-case' Make sure plumbing and electricity are up to code. Consider landscaping, plants, grill, neighborhood association fees, water (if you have a big yard or a pool, you may want to install a separate water meter for outside watering to save on sewage).And all the ther suggestions I have already seen here. But, I don't think deocorating needs to cost 20-30% of the cost of the home if you proceed slowly.Good luck! It's all worth it.Jody
When checking on the average utility bills, be sure you consider how many people are using the house vs. how many if you buy it. Also, how warm/cool do they keep the house? Our electric bills are slightly higher than average around here because I keep the house at 76-77 during the summer.Don't remember if anyone else mentioned insurance--older homes with knob-and-tube wiring or galvanized pipe for plumbing supply may cost more to insure. Houses very close to a fire hydrant cost a bit less. Brick houses may cost a bit less than wood to insure, although since they are typically more expensive to build the insurance cost is about the same.Kathleen
Other costs to think about:1 Homeowner association fees2 Yard maintenance expenses (lawnmowers/yard tools/sprinklers/etc)3 Purchase of Major appliances (washer/dryer/refrigerator/freezer)4 Additional or new furniture
Don't overlook the trips to Sears, Wal-Mart, Home Depot, etc. You won't buy "a garden hose"; you'll buy the top-of-the-line garden hose, a hanger to store it on, lead anchors and lag bolts to mount the hanger, and a masonry bit. Because this is "my home and I want to set it up right".Make these purchases foolishly .. shop the sales, pay cash (no 21% on monthly balance), and determine whether the need justifies the expense.Lawn care or lawn equipment, appliance maintenance, painting and plumbing costs, repairing the fence. They may not fit your definition of "monthly expenses" now, but they will soon. You either budget for the inevitable, and set aside this money, or you risk financing these things as they become immediate necessities. I've done it by both methods, and believe me, buying a quality piece of goods or service on your terms beats buying "make do" goods at a premium.Enjoy the new homestead and good luck!
A couple things I learned by purchasing a home that was about 15 years old: Roof shingle replacement, heating and air con system replacement, auto-open garage door and the control system replacement, expense for tree trimming, expense for putting in a cement driveway to the garage, hot water heater replacement. Those are some things I have been confronted with (or soon will be) since becoming a first time home buyer some six years ago.
Maintenance is a big one. This depends on the condition of the house. An inspection will reveal a lot. Another expense is any remodeling you may want to do.Once you know how much home you can pay for in terms of mortgage, taxes, PMI, insurance, then you can see what's left in your budget. Of course, you have to sutract other living expenses. So, if there's something left, decide if it's enough based on what your best guess is for maintenance and remodeling.Don't make yourself "house poor" whatever you do.
Don't underestimate the cost of repainting the house, especially the exterior with highest grade paint (the interior walls are more suitable to do-it-yourself work). Don't budget on doing the outside yourself - it's very dangerous (risks of lifelong injuries you can't afford to take)and the "devil is in the details." Good painters are not cheap, and that's all the more reason to put the best paint possible on, because it's only a fraction of the job cost. Even though you may plan on waiting, say, 3-5 years for your next painting, consider that cost and remember you're going to need that cash lump sum ready in a few years; divide that sum out by, say ten years and add that into your annual budget for planning purposes.Finally, when all these hidden costs add up w/ the mortgage to be much higher than rent (it will), remember what you're living for; it's wonderful to "own a piece of the rock" in a community you love, and to have every good reason to stand up and complain or advocate, lead or support change and betterment for your neighborhood. You complete your franchise as an American in ways you never will as a renter. Homeownership is sometimes like a garden, it's cheaper and easier to live without it, but oh, how sweet it is.
What are the other monthly expenses involved in owning a home?Well Amos, We recently sold our house and moved back to renting status. There are, of course, plusses for each. Some additional things to consider are:1. Homeowner's Association Dues2. Installing landscape if there is none, or you like to garden (costs are plants, dirt, compost, mulch, edging, more plants when those die, etc. ) Maintenance of landscape adds to your water bill for grass and trees.3. The distance that you will be moving away from you or your spouse's employment, if it is greater than where you currently live, will add more to your Auto gasoline bill and mileage to your car. 4. You will SPEND more TIME on taking care of your house, usually more time in the warmer months. 5. A Zoned A/C adds lots to your electric. That means you have more than one A/C unit to operate and maintain.6. You also have to consider all of the great OUTDOOR DECORATIONS. Add another 10% to that decorating bill.Some expenses are not necessarily of the dollar kind. We have much more time with our kids now that we are not taking care of our "house". Good luck, shop Foolish!robin
There are big ticket items that you need to check out before buying a home. They are: plumbing, sewer, electrical, roof, termites, and possible asbestos. If any of these items need replacement they will run about 5k a piece. It is vital that you have an home inspection done by a licensed professional. If they find any problems you must negotiate the price of repairs with the owner or you may be stuck holding the bag.
When you are curious about a particular house, find out the age of the furnace, air-conditioner, dishwasher, fridge (if included), microwave, etc. The building inspector sees each is working (hah!) but it's amazing how quickly they might need replacement. Try to buy the Insurance policy that covers any replacements for the first year of your ownership. It's well worth the price, we learned.These suggestions are predicated on your buying an existing home.Good luck!Roberta T.
My coworkers told me to expect any repairs to require at least 3 trips to the home supply store.When I decided to check the washing machine hoses, I ended up having to take a trip to Furrows to get pliers, faucets, plumbing tape, and another trip to get new washing machine hoses. (If the shut-off valves for the washing machine had not been disturbed for 19 years ... )When I had a slow leek from the toilet tank to the floor, it was a trip to get new bolts and gaskets. Another trip to just replace the entire guts since they were now disturbed and wouldn't stop leaking into the bowl. A third trip to replace the hose that started leaking. A fourth trip to replace the faucet at the wall (but I couldn't get it off, but fortunately the guts of the faucet fit). THREE DAYS to fix what started out as a slow leak from the tank to the floor! I took another trip to get all the parts to replace the bolts, gaskets, guts, feed hose, and faucet guts and did that task in 2 hours.After exhausting most of my emergency fund as the down payment, I didn't want to spend more money than I had to or otherwise I would have called a plumber.It seemed that for the three months after moving in to my condo I took a trip to Furrows or BiMart every other week to buy something else: shovel, hose, nossel, spade, another hose and nossel, clippers, wisk broom, styrafoam blocks for blocking the basement vents in the winter and styrafoam faucet covers for when the temperature edged below freezing, compact fluorescent bulbs.There were also expenses in getting the utilities hooked up, such as paying for phone lines at two locations for a couple of weeks and for installation of the jacks where I wanted them, paying installation of cable connection where I wanted it, printing checks with my new address, getting Driver's Licence and car registration updated, postage for sending out notices to my subscriptions, cards, etc., of my new address. (The United States Postal Service wasn't a charge item for change of address with a forwarding order, but it was just one more thing that took additional time.) I ended up buying cleaning supplies to do some cleaning of my apartment before surrendering it. (I got back about half my cleaning deposit, which was better than I had expected. And, no, I just did not have time to finish cleaning the place.)Before I moved in, I had the carpets cleaned and the walls and ceilings painted. I waited a couple of months before having the furnace serviced and the duct work blown out--I was running too tight on my finances to pay for everything before moving in.
Best Of |
Favorites & Replies |
Start a New Board |
My Fool |