Understanding costs of owning a home
Roseville, CA- Owning a home is expensive. What some call “hidden” costs of owning a home include things like taxes, utilities and insurance.
A 2017 study by Zillow, “Hidden Costs of Homeownership Top $9,000 a Year” outlines the various costs and how they vary across the county.
There are clearly costs beyond your monthly mortgage payment, but I believe most of what is called hidden, are commonly known and some of them cannot be directly related to being a homeowner. In addition, articles like the one published by Zillow overlook the benefits of owning a house.
Most buyers I work with understand there are costs associated with buying and owning a home. Most lenders today require impound accounts which allow the lender to collect funds on a monthly basis to pay county real estate taxes and home insurance. These costs are explained in detail and included in the qualification for a mortgage. Most lenders will also consider the buyer’s financial capacity to pay homeowner association dues and fixed utilities.
Maintenance and Services
Buyers understand there will be utility and maintenance expense. Most buyers are renting prior to making offers to buy a home. They are familiar with the cost of utilities because they either pay them directly or know they are included in their month rent payment. Yes, there are maintenance costs of owning a home.
The Zillow article pegs services such as house cleaning, lawn maintenance/landscaping, carpet cleaning, gutter cleaning, pressure washing and HVAC maintenance at approximately $3,021 per year. These are, for the most part, optional costs and not fixed. On the other hand, replacing an air conditioner or roof are much more than $3,000.
All our buyers get a home warranty with the first year paid and a recommendation from us the not let the policy expire. This will ameliorate some of the maintenance costs and allow the new homeowner to sleep well at night.
How much home can I afford?
Money magazine recently published a very good article, “New Rules for Figuring Out How Much Home can you Really Afford.” In the article there is an excellent section taking buyers through an exercise on deciding how much they can afford to pay every month.
Financial and emotional benefits
Although the Money magazine article mentions benefits of homeownership, like many pundits it does not monetize benefits such as how owning a home can reduce taxes. I love living in the house I own but am also a proponent of thinking of it as a home and an investment. Over the years I have seen to value of my house increase, drop and recover. My return on investment will only be determined when we sell but knowing the value, at this time, is greater than what we paid feels good. Most homeowners also understand the emotional benefits of owning where they live and be freedom to make changes and improvements.
Julie Jalone – Magnum One Realty
If you have any questions about this column or buying a home, please feel free to contact me at MagnumOne Realty office in Roseville (916-899-6571) . You can also reach me by emailing to email@example.com (DRE# 01418097)