Home Ownership: it's just a little bit more . . .
Someday, I hope to own another home, but not until I am good and ready. We are quite happy with our rental situation at the moment.
When we purchased our first home, after a year of marriage, everyone told us what a great decision we had made – “It’s the best investment you can make . . . we were married for ten years before we could afford our own home.” I am not opposed to home ownership. Under the right conditions, I think it is a great idea, however, it is important to recognize that as a culture we have been conditioned to think that owning your own home is the pinnacle of human existence. The problem is that in the past, when a person owned a home, they truly owned it – now the definition of home ownership has become “living in a building owned by a bank”. And that building, owned by the bank always seemed to cost us just a little more.There were many things that I did not understand when I signed the documents that committed me to live in and care for the bank’s home for the last eight years. The biggest factor that I did not completely grasp was the true cost of home ownership. I soon came to realize that owning a home costs just a little bit more.
Loan Approval and Shopping for a Home
When you go to the bank for loan approval, the monthly payments always seem to be a few dollars higher than you were originally told. The realtor will always show you homes that are just a little bit more than what you think you can afford.
Understand all of the components of your mortgage payment – everyone knows about principle and interest, but make sure you know if you are subject to private mortgage insurance or PMI. PMI can add anywhere from $20 to $100 per month to your monthly payment. Your broker will tell you “it’s just a little bit more“.
Yes, they were all there on the little sheet, the whole list, but when we bought our first home, I never really looked at the entire picture. I saw all the relatively small amounts – $50 here, $250 there, $75 again, but each one was just a little more out of pocket cash or making my monthly mortgage payment just a little higher.
Property taxes are a major deal killer in my book. In the state where we lived, our taxes were almost double the amount that they would have been in any other state. Be sure to use this in figuring the cost of home ownership. Taxes are always just a little bit more.
I think my homeowner’s insurance was reasonable. I think we were getting a good value for our money, but sometimes insurance is not always something that new homeowner’s think about critically. To them it’s just a little bit more.
I really underestimated how much money we would spend on maintenance costs when we became “home owners”. There are so many things that the house needs, things break, improvements are needed and it’s all just a little bit more.
We did everything we could to reduce utility costs in our home, but we never seemed to be under budget. Cold winters, hot summers and everything in between all served to squeeze just a little more money out of us.
Here is the point, new, potential homebuyers need to look at ever single expense as a lump sum before making the decision to buy. I do not believe that my wife and I would have become home owners eight months into our marriage if we had added the following costs:
- Private Mortgage Insurance
- Homeowner’s Insurance
- Soft water softener rental
- Heating bill
- Electric bill
- Water bill
- Maintenance costs – lawn care, exterior, interior, systems repair, cleaning
Add that stuff up, look at that number and if you still think you want to buy the house – great! But be sure to add just a little bit more.
Photo by jamiejohndavies