We all know that there are several major incentives to go out there and buy a house. Everybody is talking about the tax credit, low mortgage rates, low housing prices….the list goes on. And while this is all true, a lot of people fail to acknowledge the fact that being able to buy a house is not the same as being able to afford owning it.
The cost of home ownership is what has kept me and my family from buying a house for a long time. Being a military family, we don’t stay in one area long enough to build up significant equity, especially in the declining market. And every time I start itching to buy – I think about all the related expenses, which we would not have been ready for at the time.
So, how much does it really cost, not only to buy, but to actually own a home?
First, you have the obvious:
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Principal of your mortgage
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Interest
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Property Taxes,
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Insurance (otherwise known as PITI)
These are the expenses that most people are aware of when buying.
However, what I think some people underestimate are other costs, such as utilities. If you are used to renting a small apartment, or have utilities included in your rent, you might be in for a big shock when you receive the heating bill for a house.
Then, you have the appliances. As renters, all our rental homes came with washer, dryer, stove, refrigerator, dish washer, and microwave. And though some homes for sale do come with them, for the most part you have to buy your own.
Experts say that you should set aside about 2% of the cost of the home for repairs and necessary maintenance each year. 2% of 100,000 is $2000. Of course, the cost of the repairs and maintenance depends a lot on the age and the condition of the home. Even though 2% for maintenance seems like a lot, it is peanuts next to what you’ll have to pay to repair damages that have been building up over time. Leaking roofs, electrical issues, termite damage, and plumbing (just to name a few) can all result in thousands of dollars in repairs if neglected.
I love the fact that there are so many incentives to buy a house right now. I am ready myself. Our next duty will be for four years and I feel comfortable buying a house for at least that long. I only have a few more months to find out where it is we’ll be stationed at, and then off I go – house hunting. At least, that’s the plan.
I think there are a lot of you out there that feel the same way. Well, before we all go out there to put an offer on this great deal of a house – because we can afford to buy it, let’s sit down, look at our finances and income and assess whether we can afford owning it.
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