How much is a house really going to cost me?
How much is a house really going to cost me? A lot more than you probably think ;) Although it's still doable if you're ready to jump in! I was asked this same question by a fellow reader recently, and thought I'd forward my answer over for anyone else just starting the home buying process:
"Wow, that's certainly a loaded question! Here are my quick thoughts - First, it'll probably cost you a lot more than you originally think. Between the down payments (usually around 20% of purchase price these days unless you go FHA or other routes), the closing costs (usually around 3-5% of purchase price), and moving, picking up new furniture & household items, and then future taxes/homeowner dues/condo fees, it gets pretty crazy.
All that said, however, it could definitely be worth it while the prices are so low! If I didn't already own I'd be all over it (although I surely have my moments). In all honesty, I recommend finding a local realtor and scheduling a meet-and-greet w/ him or her to get all the info. from the beginning. It doesn't cost a penny (if they say it does, hang up and go somewhere else!), and that person could work on your side to help you through the whole process. As a previous realtor myself, I can tell you it's well worth your time.
You could also check around other blogs and click on "home ownership" or similar labels to get a general idea as well :) Try mymoneyblog.com - he has a great pool of info. Hope this helps! And good luck, let me know what you end up doing."
"Wow, that's certainly a loaded question! Here are my quick thoughts - First, it'll probably cost you a lot more than you originally think. Between the down payments (usually around 20% of purchase price these days unless you go FHA or other routes), the closing costs (usually around 3-5% of purchase price), and moving, picking up new furniture & household items, and then future taxes/homeowner dues/condo fees, it gets pretty crazy.
All that said, however, it could definitely be worth it while the prices are so low! If I didn't already own I'd be all over it (although I surely have my moments). In all honesty, I recommend finding a local realtor and scheduling a meet-and-greet w/ him or her to get all the info. from the beginning. It doesn't cost a penny (if they say it does, hang up and go somewhere else!), and that person could work on your side to help you through the whole process. As a previous realtor myself, I can tell you it's well worth your time.
You could also check around other blogs and click on "home ownership" or similar labels to get a general idea as well :) Try mymoneyblog.com - he has a great pool of info. Hope this helps! And good luck, let me know what you end up doing."
Labels: advice, home ownership, reader mail
posted by J. Money at
8:19 AM
14 Comments:
Ugh, our mortgage is roughly $1,700. The miscellaneous other (utilities, HOA, taxes, etc) brings that up a good $800. And we bought a foreclosure!
It's very important to go with an agent you trust who's going to tell you about the taxes and fees and other assorted expenses. Don't stay with an agent who tries to show you houses above your budget ("We'll just talk them down") or who tries to play off the costs of home ownership.
We are just starting the process of looking for a house, it is crazy how nervous I feel? Everything has changed so much in the last year that I feel like I am making a mistake? I guess the main objective is to not be "house broke" and be able to afford something that you can pay of early right? Thanks for the info and I am off to do some research!
I am also just starting the process of purchasing a home. Just started talking with a friend of a friend who is an agent in the city I'm looking in and I'm in the process of being preapproved to see what I can afford. I'd honestly like to buy something as far below what I can afford but that I still love in order to have that wiggle room to be able to pay it off early, or at least be able to save some money every month instead of everything going to mortgage and taxes and ground rent for some locations in the city! Of course my DBF and some of my friends are trying to encourage me to buy one for the maximum I can afford. Thank goodness I don't give into that sort of peer pressure! Easy for them to say when it isn't their money paying the mortgage!
Thanks for the sugestion of mymoneyblog.com. I'll have to check out what kind of information is on there!
I think another important point is to make a list of what you are looking for and stick with it. A house is more than an investment - it is where you will be the majority of your non-working hours. With good prices around, it is easy to snap up a deal, only to realize that you hate that the expressway runs through the backyard. Before you go looking make a checklist of Must Haves, Would Likes and Can't Have - then discuss it with your realtor so they can help you find the right place for you.
Houses always cost more than first time homebuyers expect, you wouldn't believe how many forget you have to pay insurance and property taxes! Plus maintenance, something is guaranteed to break or need fixing every year. Most 1st time homeowners don't have anything saved for maintenance and repairs. The utilities you may or may not be used to paying, depends on where you lived before. Some apartments cover all of that, others make the renters shoulder the whole cost. But still a house's utilities are usually still higher! I think the short answer to how much is a house really going to cost - A Whole Lot More than you Think it Will.
Buying a house is no joke. You must arrange everything first, plan out the whole thing carefully with your partner before jumping into that decision. Then look for a realtor that will work on your side to help you through the whole process.
For tips on personal finance, visit http://www.mikesmillions.com/blog.
My husband and I were very lucky in that we got our house at a good price and for a good rate. Many of our friends pay more to rent than we do for our mortgage, insurance, and taxes -- though, part of that is that we've now lived in the house for five years, while rent has been going up, AND that doesn't count renovations/improvements on this fixer-upper we got. So, as you can see, there are two sides to every story.
If you're going to buy a house, get it inspected and then inspected again. I can't believe all the stuff our inspector either missed or just didn't tell us. Bring as many house-handy people through as you can -- friends, relatives, professionals, you name it.
Also, make a list of not just the things that have to be fixed, but also the things that you want to fix/change -- and take a look at the prices. You may tell yourself now that you can live with those hideous bathroom fixtures for a few years in order to make the budget work -- after all, you've tolerated far worse in your apartment for longer -- but there's also a good chance that you're going to end up replacing them sooner just because you can. A faucet here, some paint there, and it can really add up if you're not careful! Keep that in mind and give yourself a realistic monthly budget.
As a house hunter myself, 1st timer I might add, thanks for all the sound advice posted here.
Don't forget that you also have to take potential repairs into account. They spring up at inopportune times. (And the realtors like you to have 6 months' salary in abeyance.)
Plus, it's important to remember that, if you pay 30 years on a mortgage, your house cost will be about double, by the end.
Electric, natural gas, water, garbage, sewer, taxes, insurance, internet, cable, phone, security...did I forget something? Maybe homeowners association? Oh yeah, furniture, bed, dresser, nightstand, dining table and chairs, couch, coffee table, end tables, lights, tv, stereo, umm maybe a PS3? How about a computer too. Sometimes I wonder how I can afford to live at all.
@Frugal Urbanite - Wow, yeah that's crazy. Foreclosure even? man....good advice on picking the right agent!
@Atlas@mymoneyshrugged - No doubt! Do your research and pick up a place you're happy to live in, but one that's feels fine in the budget department. Ask yourself, "Would I be happy living here for 5 years? And also making these payments every month?". It's perfectly normal to feel scared and wonder if it's a right time or not :) we did the same thing...only, it WAS the wrong time! haha....but you know what? you learn and move on with life. the good thing for you now is that prices are so low!!! yeah they may get lower, but it's like timing the stock market - not worth it.
@MK - "being preapproved to see what I can afford." Exactly! And just because you CAN afford something, doesn't mean you need to. find your max you'r willing to spend and don't check out places higher, even just a tad! you'll find ways to convince yourself you can do it ;) I'm pretty sure that's what happened with us.
@Dawn - damn straight, excellent advice!
@Miss M - for sure, it always costs more than you think. truth be told, we didn't save much at all for maintenance, extra work, etc. we've got a bit of padding now, but it's taken us 2 years to get on track. it also reminds me how much I loved renting ;)
@Mike Pastore - Yessir, most definitely.
@Meg - Fabulous, you can just copy and paste that into a whole new post of your own! haha...very well written and thought out for sure, thanks for dropping it :)
@Denis M - Glad it helps! The blogging community is awesome at bringing heads together and sharing information. You could tell just by all these comments & sound advice!
@Abby - How horrible is that? 30 years of paying and you paid hundreds of thousands of dollars in interest..bleh. But then again we have to live somewhere right? renting & owning costs money no matter how you slice it...
@Anonymous - Scary. But oh so true!
Thanks! Sometimes I think I should do that! I don't know why I don't, but I've just gotten out of blogging lately. Instead I leave really long comments on others blogs ;)
Hey, that works too ;) As long as someone has access to that brain of yours.
We bought our house about 3 years ago now, and owning a home is a lot more expensive than you might realize. Down payments, closing costs, insurance, maintenance, property taxes, homeowner's associations, utilities, landscaping, furniture, etc etc etc.
Just be sure you know what you're getting into when you buy a home. It's going to be an expensive proposition!
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