July 6th, 2017 6:52 AM by Jackie A. Graves, President
It's one thing to go from renting an apartment to buying an
apartment, but going from renting an apartment to buying a stand-alone house is
a whole other story. Not only will an actual house most likely be larger square
footage-wise, but houses come with a world of hidden expenses that apartments
don't necessarily share (even when you own one).
you're buying your very first house, here are a number of costs you're likely
this is true of any type of home you buy, signing a mortgage doesn't just mean
forking over your down payment; it also means shelling out additional money for
closing costs. Closing costs typically equal 2% to 5% of a home's purchase
price, so if your house costs $300,000, expect to pay anywhere from $6,000 to
$15,000 up front. Now some lenders will let you roll your closing costs into
your mortgage, but that's not always the case -- so be sure to have that money
available when you sit down to finalize the deal.
taxes go hand in hand with homeownership, but if you're buying a house, you
might come to pay more than someone who decides to purchase an apartment.
That's because in addition to all that interior square footage, you're getting
actual land to enjoy as well. The average U.S. homeowner pays $2,127 in
property taxes, but in some parts of the country, you might pay 10 times as
much. Be sure to factor property taxes into your budget when deciding how much
house you can afford, keeping in mind that, unfortunately, they have a tendency
to rise over time.
renters are wise to get insurance to cover property damage or loss, but if
you're a homeowner, insurance is downright required. Not only that, but you'll
probably pay more for insurance when you buy a house as opposed to an
apartment, since your insurance company is taking on the risk of not just
interior damage but external damage as well. The average U.S. homeowner
currently pays $964 a year for homeowner's insurance, but depending on the size
of your property and where you live, your bill might be much higher. The same
holds true if you have a swimming pool or other potential safety hazard.
Not everyone manages to come up
with a 20% down payment for a house. If you're not putting 20% down, expect to
pay private mortgage insurance Opens a New Window., or PMI, which serves as
a means of financial protection for your lender. PMI is typically tacked on as
a premium to your monthly mortgage payment, and it usually equals 0.5% to 1% of
your home loan's value. So if you take out a $240,000 mortgage at 1% PMI,
you'll pay an extra $200 a month. Ouch.
you own a home, you're responsible for all interior maintenance items. So if
your house is large enough to require two separate air conditioning units,
you'll have two yearly tune-ups to pay for. Similarly, the more rooms your
house has, the more you'll need to spend on carpet cleaning, window sealing,
and the like.
as buying a house means taking on the cost of interior maintenance, so too will
you have to worry about ongoing outdoor maintenance. Be prepared to fork over a
pretty penny for things like lawn care, gutter cleanings, and pressure
you lived on your own before buying a house, you probably have some furniture
to take with you. But if you're going from an apartment to a much larger
property, you're going to have a whole lot of space to fill. While you don't
necessarily need to furnish your new house right away, over time, you're apt to
spend money on bedroom sets, chairs, sofas, and accent tables. Be sure to
incorporate these costs into your budget so you're not stuck with a host of
empty rooms for years on end.
takes more energy to heat and cool a 3,000-square-foot house than it does for
an apartment one-third that size. If this is your first time buying a
stand-alone house, be prepared for your utility bills to skyrocket, especially
if you live somewhere with notably cold winters and oppressively hot summers.
When you live in an apartment,
you probably don't put much thought into the water that runs through your
pipes. Chances are, you don't even pay for it separately. But when you buy a
house, not only are you responsible for covering your water bills, but you'll
often be required to pay for sewer service into your home as well. Now if your
house isn't connected to a public line, you won't get charged for sewer
service, but you will require a
septic system -- and that's a whole other set of costs to contend with.
think moving out of an apartment would mean ridding yourself of unwanted little
creatures -- but not so fast. Many houses require regular pest control
treatments to keep termites, carpenter ants, and other such undesirable
visitors at bay. And because you're covering more space than you typically
would with an apartment, you can expect to pay more.
you live in a part of the country that tends to see its fair share of snow, you
may be in for an unpleasant financial surprise come wintertime, and that's the
cost of snow removal. While some homeowners opt to tackle snow removal
themselves, if you have a large property or an injury preventing you from doing
what can often be a back-breaking task, you may need to call in the big guns --
and that could put a strain on your budget if you aren't prepared for it.
don't want to call a handyman every time you run into a problem, but unless you
have a reasonably loaded tool chest, you may not be able to tackle all of your
home projects and maintenance yourself. If you're buying your first house,
expect to spend some money at your local hardware store. Though your new
collection of hammers and wrenches might be a one-time expense, it's probably
not the sort of thing you can put off.
a difference between cleaning a modest-sized apartment and a much larger house.
Though you'll need the basics -- think tile cleaner and disinfectant spray --
regardless of where you live, you'll require much more of it once you move into
an actual house. Furthermore, if your house comes with features your old
apartment didn't have, like carpeted floors, you may need to add some new
supplies to your list on an ongoing basis, all of which are bound to cost
money, especially over time.
because you're buying a house doesn't automatically mean you need an alarm. But
many people who buy houses decide to install alarm systems, both to protect
themselves from intruders and to snag insurance discounts. An alarm service
might add as little as $20 a month, or well over $50, to your overall expenses,
and in many cases, you'll need to pay to have an actual system installed --
which could be a multihundred-dollar expense right off the bat.
a homeowner, it's critical to factor regular maintenance into your budget. But
what about the expenses you can't predict, like when your roof springs a leak
or your water heater goes kaput? If you're buying a stand-alone house, be sure
to pad your budget to cover the repairs you'll inevitably face. And,
unfortunately, the larger your property, the greater your chances of
encountering some sort of expensive disaster.
Buying a house means taking on
a world of financial responsibility. Before diving in, crunch some numbers to
see what you can truly afford, and make sure to have a decent amount of emergency savings Opens a New Window.on hand. You never know
what sort of expenses homeownership will bring about, so the more prepared you
are, the less stressful the process is likely to be.
By Motley FoolOpens a New Window. - To
view the original article click here