More and more people have now learned the benefits of buying over renting. However, it’s easier said than done. Understanding the costs involved in buying and owning a home is vital in the home buying process, especially for home buyers who are trying to determine if buying a home is an affordable option.
The problem with certain potential home buyers is that they see a listing price and assume that that is all that will be required to be paid. However, they forget to factor in such things as the down payment, insurance, as well as the costs involved with the move to the new home itself, and the purchasing of major appliances, furnishings and design accessories. Another thing that home buyers need to be aware of is the responsibility involved in owning a home, which is directly related to the upkeep of the home. When something needs to be fixed, unlike a renter, who can call the landlord, the home owner will either need to fix it themselves, or be forced to hire a professional to do the job. This leads to increased expenses related to home ownership, which many potential home buyers forget to factor in when thinking of buying a home.
Some major decisions need to be made before even thinking about purchasing a home. The potential home buyer should first determine property value of homes that have grabbed their attention. Then, the potential home buyer should compare that to the prices of homes recently sold of similar size within the same neighbourhood. That way, the potential home buyer can quickly realize if the price is too high, a fair value, or possibly a steal.
The next step for the potential home buyer would be to compare various mortgage loan types and review the required down payment amounts to the money they have available. Down payments are based on a percentage of the value of the property and also by the type of mortgage selected. They typically range from three to twenty percent of the property value.
Beyond that, the potential home buyer must also be aware of additional costs, such as closing costs, and the costs involved with the actual move to the new home. Costs here are related to either the hiring of a moving company or even simply renting a truck.
Another cost can actually be minimized if approached in the right manner. A budget for maintenance and repairs should be determined, but these costs can actually be minimized if the potential home buyer ensures they are getting a home that is intact, and not falling apart from within. Here, a home inspection company can sometimes help in that they could possibly estimate typical costs for major and minor repairs.
Once all the numbers have been crunched and analyzed, the potential home buyer can better ascertain whether or not they can afford the home in question. The final step by the potential home owner is to weigh those costs with the financial benefits, and then decide on whether purchasing a home is a viable option. Understanding all the costs involved with home ownership is vital in the home purchasing process, as even though a home buyer may think they are getting their dream home, the costs involved after purchase, such as property tax, mortgage payments, insurance, maintenance and more, can quickly turn their dream into a nightmare.
