Do You Know The TRUE Cost of Home Ownership?

by Eric Lindlau 12/17/2018

You found the perfect home. It has everything you want from location to bedrooms to that art studio in the back, AND the mortgage payment will be lower than or the same as your current rent. You got qualified for the loan and the agent has all the paperwork ready to go. So that’s it, right? Time to buy!

In all the excitement of finding that new home, it’s easy to ignore the warning signs of “overspending” and forget that there are more costs than just the mortgage payment. This can be a dangerous game because once those papers are signed, you are stuck with your purchase. 

Additional Monthly Costs
For the best home-buying experience, calculate ALL your monthly costs and try to budget that into your life before you make any final decisions. Determine what you are willing to give up in order to get that extra bedroom or live in that perfect neighborhood. Some additional monthly charges include:

  • PMI “Private Mortgage Insurance”: Pay attention to the mortgage you qualify for and make sure to calculate for PMI in your new monthly budget if it applies. PMI exists to protect your lender in case you default on your mortgage loan. It’s usually included when you have a lower credit score or a smaller down payment and can range from $75 to $300 per month or more.
  • Homeowners Insurance: You’ve been paying renters insurance for a while now probably, but homeowners’ insurance is a completely different ball game. Your insurance cost will be based on the estimated cost to fix or rebuild your home after a catastrophic event, NOT its market value. That means any special features with historic value, specialty windows, etc. will increase the price. Also check out if the home is in a weather damage area, somewhere prone to tornadoes, flooding, hail, etc. It also covers everything inside your home from furnishings to clothes and electronics. The more stuff you have, the greater the cost to insure it.
  • Property Tax: Unlike tenants, owners pay taxes to local governments for schools, roads, city governments, etc. These vary greatly from area to area, so be sure to find a good local property tax calculator to help estimate what those charges will be. If you’re buying a home in a new neighborhood or a gentrifying one, there may be additional taxes to cover the cost of roads, streetlights, parks, and other new area features.
  • Association Fees/Dues: Nearly all condos belong to Home Owners Associations (HOAs). Depending on the neighborhood you choose, your single-family home may belong to one as well. HOAs handle neighborhood maintenance including streetlights, pool upkeep, exterior maintenance, parks, and even security. HOA dues can range from $50ish per month up into the hundreds of dollars or even more.
  • Services: You know all those utilities and local services currently included in your rent? As an owner, you must pay for all of them separately. That means water, power, trash, sewage, recycling, internet, cable, and phone bills all get added on top of your monthly payments as well. Some cities such as Austin, Texas, also have local monthly fees separate from property taxes, usually to cover extra city features like parks.

Other Costs
The most difficult costs to calculate or plan for are maintenance costs. If your landlord currently covers bug treatments, light bulbs, paint, carpeting, landscaping and generally all other maintenance, you will need to try and estimate how much of that you’ll need to pay for in your new home. There is no one else to pitch in, so this can end up being a huge additional cost.

So, How Do I Buy a Home Safely?
First, find yourself a good agent. A well-qualified agent who is familiar with your area and property needs can help you figure most of these costs. All you must do is ask. If your agent is unable or unwilling to help you plan for these, find yourself a new agent.

Ask your agent today if they can help you put together a true cost budget for each of the homes you’re interested in, that way you can make the best-informed decision. 
About the Author
Author

Eric Lindlau

 

About ERIC LINDLAU

My Client-First Philosophy

There are many qualities and skills that go into being an excellent real estate professional - integrity, in-depth community and market knowledge, marketing savvy, effective negotiation skills and a high-quality professional network, all of which are hallmarks of how I work.

That said, in my experience as a COVENTRY real estate professional, I've also found that providing the very best service is essentially about putting my clients first. This means keeping myself accessible, being a good listener as well as a good communicator, and responding quickly to your needs.

This "client first" philosophy has always been my approach and it requires me to continually improve my skills and ways of doing business. In addition, I've found that the latest technologies are enabling me to do everything I've always done, only much more quickly and efficiently. They've also helped me to extend the range of services I provide to my clients.

So when you decide that you'd like to buy or sell a home in the COVENTRY areas, please contact me.

*****Highly likely to recommend

05/11/2017 - lisal campbell13

Sold a Single Family home in 2017 in Coventry, CT.

  • Local knowledge: *****
  • Process expertise: *****
  • Responsiveness: *****
  • Negotiation skills: *****

I am a 70 yr old recent widow who needed to reluctantly sell our house alone for the first time. Eric Lindlau, owner of Lindlau Realty, was the perfect choice for me. He explained in detail the entire process answering all my questions. He was sensitive to my emotional state, kind and helpful in every way. He even assisted me when I accidentally locked myself out of the house! He emailed me selling prices of comparable houses, which helped me understand realistic values in our living area. I highly recommend this personable young man for your real estate needs.

*****Highly likely to recommend

01/18/2017 - soxgirl13109

Bought a Single Family home in 2016 in Coventry, CT.

  • Local knowledge: *****
  • Process expertise: *****
  • Responsiveness: *****
  • Negotiation skills: *****

Eric was GREAT to work with!! He was a dual agent for us and the home seller. When any challenges arose he knew how to handle them with poise. He was in communication with us throughout the entire process. I would recommend him for all of your real estate dealings.

*****Highly likely to recommend

01/09/2017 - laurak777

Bought a home in 2016.

  • Local knowledge: ****
  • Process expertise: ****
  • Responsiveness: ****
  • Negotiation skills: ****

Eric was an amazing person to work with. He helped me through a somewhat difficult purchase that had lots of unexpected bumps. Eric always returned my phone calls and emails promptly and was above all...honest!!! So many times when you are dealing with folks who make their living on commission, you feel like they are trying to "sell" you all the time. That was never the case with Eric. He was a complete professional and nice guy. I enjoyed working with him so much that he is now representing me in another sale.

*****Highly likely to recommend

12/07/2016 - kclancy098

Bought a Single Family home in 2016 in Coventry, CT.

  • Local knowledge: *****
  • Process expertise: *****
  • Responsiveness: *****
  • Negotiation skills: *****

Eric was always so willing to work with our schedules and he took the time over 3 months to show us over 20 houses. He was very knowledgeable and would give us his honest opinion. He always gave us great and honest advice but would still do whatever we asked of him. He found us such a good deal and when we thought we were extremely annoying or need to he was always pleasant and willing to help however.

*****Highly likely to recommend

09/15/2016 - DarleneWalworth Suchecki

Sold a Single Family home in 2016 in Coventry, CT.

  • Local knowledge: *****
  • Process expertise: *****
  • Responsiveness: *****
  • Negotiation skills: *****

Mr. Lindlau is an extremely knowledgeable and professional real estate agent. He made the whole home selling experience easier and I had complete trust in him. His negotiating skills were wonderful because he is such a great people person. I guarantee that you will not be disappointed if you choose Eric Lindlau for your Realtor.