Should You Consider to Own A Home?
Owning the home is a great feeling and one that many first timers fail at as they forget to analyze all the costs that are involved. These same costs are there if you rent a home, but not if you are renting an apartment. For those that are living with roommates, or rent an apartment, your first home is going to have more expenses than you thought it would. While you might be figuring in the cost of the mortgage or rent of your new home, there are other costs that you need to take in mind before you sign the paperwork. If you know them up front you will know what questions to ask before you sign so that you are not in for any surprises. Here are some things to know about your new home and how to make it successful.
Know Your Credit
Most banks and many homeowners that are looking to rent out their properties will want to do credit checks on a person to be sure that they are financially trustworthy. This doesn’t guarantee you a positive or negative answer from a lease but it could from a bank. The higher your credit score the better, but life doesn’t always work like that. The first thing you want to do is know what your credit score is, but you don’t want to check it too often. Generally, the more often you check your credit score the more your credit score takes a hit. There are some sites such as free credit score dot com that claim to not do that, but they don’t charge you for your score either. Some credit cards come equipped with this service to give you an estimate on your score. If you have a score less than 650, don’t despair, it’s not considered bad unless it is under the 600 range. However even if it is there are ways to increase your score. But your first step is to know it, and let’s assume that it is above 650 and move forward.
Know Your Resources
Before you make the transition from an apartment or condo into a house there are several things you need to consider. First before your purchase or signing of the lease to a house you want to figure in all the costs that are going to need to be met each month. Not only will you have the mortgage payment or rent, but there could also be a housing association cost and insurance cost as well. With renting this is usually added to the price of the rent, but be sure and ask before you sign the lease so you are not in for any hidden surprises. (and more importantly read the lease before you sign it so there is nothing else hidden that you don’t want to be surprised with later.) Your core expense is going to be your mortgage or your lease. If you are already living in an apartment or condo you are already saving that much each month anyway. Housing association costs will run between $100 and $400 per month. Than you will want to factor in insurance for your home and depending on where you live, be sure to get coverage for natural disasters as well. These are the main expenses for your home and it could mean cutting your budget in other areas if you want to have that house.
Know Your Bills
Whether you are still living at home with your parents, living in an apartment or living in a condo, when you transition to a home you are going to have more bills. Be sure to plan for the extra expenses and you can easily figure them out based on the number of people that are living in the home. Of course you also need to keep in mind that these bills change during the winter and the summer months. During the winter you will use the heater more often which could raise your gas bill. You might decorate during the holidays and that means more electricity. (If you have electric heat, combined with decorations your electric bill could double.)
There are going to be more bills because you will now be paying for everything. Here is what you should plan for as far as bills to pay, the rates will vary depending on usage and your area:
Gas ($15 – $50)
Electric ($50 – $150)
Water ($25- $200)
Trash ($15 – $35)
Cell Phone ($35 – $250+)
Cable / Internet / Home Phone ($150 – $350)
Car Insurance ($45 – $125)
House Insurance / Renters Insurance ($75 – $200)
Fuel for vehicles ($60 – $100)
Gardening Service ($100 – $150)
Now you could essentially get rid of cable, but you will still need internet Wi-Fi, and you could lose the home phone if you rely on your cell phone only. For safety I recommend having a home phone though since cell phones can get damaged, and the cost is only around $20 a month. If your cable provider has a package deal that includes phone and internet, you are going to want it, as it will save you money. There are more bills to consider as well such as a car payment, credit cards, or if you get magazine or newspaper subscriptions, or even water delivery service. These can be cancelled to save money, but if you budget them in you will be fine. Fuel for your car is a must or you can’t get to work to pay the bills in the first place. If you plan for a middle rate on all these expenses, you will be able to afford your new home. Never plan for a low end as rates will change, and then you will not be able to afford anything.
Know Your Time
A house requires more upkeep than an apartment or condo. There is more space, and more too clean, which will take more of your time. If you enjoy yard work you can cut out the gardening service and do it yourself. Mowing the lawn, weeding, edging, and gardening are relaxing but could kill your weekends. This of course takes time. If you have children than it is time they all pitched in if they don’t already.
Unless you are renting and the lease says that the landlord will cover maintenance costs, anything that breaks means you have to shell out the cash to repair it. Keep money set aside for these possible outcomes so that you are not left in a bind should the worst happen.