If you are in the market for a home, there are a lot of things that you need to consider besides the cost of a home. Let’s say that your budget is $200,000 for a home. You could find 4 homes for that price and each one would cost you a different amount each month. Take a look at some things that you need to look at before making an offer. Factors that could raise your monthly payments and expenses by 400 dollars a month or more on an average home.
This one is a biggie. Property taxes could range greatly from city to city. Where I live, for example, the people in the city 1 mile away from me pay .8 percent more in tax. On a $200,000 house, that is $1600 or over $130 a month.
So, you could buy identical houses, just a few miles apart and everything else being equal, you could pay over a hundred dollars more a month for it.
Before making an offer, have your realtor pull the property tax rates for the home. If you want to do it yourself, you can usually find the tax rate by going to the county appraisal district website.
If your potential home is in an HOA neighborhood, you need to investigate the fees that you will have to pay for the privilege of being a member. It is not an option. Fees can range wildly based on the cost of maintaining the neighborhood and the amenities provided. On an average home, fees could be anywhere from $50 a month on up to $300 a month.
Sometimes these fees may be included in your mortgage, but more often than not, you pay them separately. HOA dues could be paid monthly, quarterly or semi annually. Every community is different.
Your insurance provider will set the price of your home insurance premium based on the risk that insuring the home comes with. If you live far away from a fire station or hydrant, for example, you will pay more. If your roof is older, you will pay more.
When I moved to a new home a few years ago, we actually bought a slightly cheaper home and pay twice as much in home owners insurance. It was an additional $100 a month, on a cheaper home. Ouch, that one hurt.
Luckily, it is very easy to get quote on home insurance. You can do it online in just a few minutes. Before making an offer on a home, get an estimate and factor it into your decision. You could have two very similarly priced homes and one might cost you $100 more a month to insure, maybe even higher.
Energy efficiency has come a long way in the last 10 years or so. A newer home will be sealed up tighter and will have much more insulation. It will also have much more energy efficient appliances and heating and cooling systems.
The result is that a home built recently may have a monthly energy bill that is half of that of an older home.
I’ll give you another example. The last home that I bought, about 4 years ago was new construction. It cost about $100 a month in electricity to run this 1800 square foot house. My new house is 16 years old and my average electric bill is just over 200 dollars. The kicker is that the house is actually about 200 square feet smaller and still costs more.
When making an offer, always consider the age of the home as it will have a big affect on energy bills. If it is an older home, look to see if efficiency has been upgraded. Things like extra insulation in the attic (12 inches is recommended) and newer air conditioners can make a big difference in your monthly expenses.
This is another area to look at. How much is that home going to cost you in maintenance. In general, an older home is going to cost you more in maintenance, after all, all of its systems are getting old and possibly nearing the end of their life. If your home is over 10 years old, you should be stashing a little money away each month for eventual repairs.
Newer homes will initially be less maintenance but you need to look at things like lawn care. A pretty big corner lot might cost you more in cutting costs. If the home has a pool, it will cost money to keep it clean and well maintained.
Tina’s Last Word
As you can clearly see, every home comes with its own set of expenses. If you bought a brand new $200,000 home in a low tax city, you could pay hundreds of dollars less a month than an older home that costs the same amount.
It pays to do your research and weigh out tall of the expenses because they could be significant.