Category Archives: living well

6 Costs Homeowners Overlook and How to Pay for Them

For many people, a house is the biggest investment they’ll ever make. And whether you’re a first-time homeowner or you’re buying your third property, you’re bound to end up covering some unexpected expenses. Here are six costs homeowners tend to overlook (that can really add up)  and how to pay for them:

1. Property taxes

Be prepared to pay property taxes and keep in mind that they rarely decrease. Homeowners often pay them every month along with their mortgage payments. If your loan is backed by the Federal Housing Administration, you’re required to have an escrow or impound account.

If you don’t have to make property tax payments through an escrow account, they may be due at the end of the year. In some counties, you might pay them in installments.

2. Homeowners association fees

Whenever you move into a new home or condominium, you become part of a community. In many cases, there are fees associated with the maintenance and general upkeep of shared common areas. The money collected might cover snow removal, landscaping or repairs to a meeting room.

Monthly homeowners association (HOA) fees for standard single-family homes tend to cost between $200-$300, but rates can vary depending on several factors, including how recently a housing community was built and the kinds of amenities that are available. That’s why it’s best to know how much fees cost upfront.

3. Insurance premiums

If you own a home, another cost you should include in your budget is insurance. The average annual homeowners insurance premium costs $1,120, according to recent data provided by the National Association of Insurance Commissioners, but the amount you pay may be higher or lower based on where you live and the kind of policy you choose.

Homeowners insurance typically covers personal possessions, liability for injuries that take place on your property, the structure of your house and additional costs associated with living elsewhere if your home is severely damaged. If you live in an area prone to natural disasters, you might need a supplemental policy like flood insurance.

4. Repair and maintenance costs

Repairing or replacing a roof, furnace or air conditioner can be expensive, and at some point, you might have to address plumbing issues or trade in some old appliances.

The cost of home maintenance is another thing you’ll have to factor into the cost of homeownership. You’ll need money to keep your yard, gutters, carpet and everything in between in tip-top shape.

Financial experts generally recommend setting aside 1 percent of your home’s value to cover the cost of unexpected repairs and maintenance. If you’re trying to save money, you’re better off doing some of the work yourself. Just make sure you have enough funds for the materials you need to get the job done.

5. Costs associated with selling a home

Having a home that’s well-maintained not only lets you enjoy your house while you’re living there, but also prevents you from being saddled with additional costs when you’re ready to sell it.

Replacing your roof or furnace might be something you want to put off, but failing to make necessary repairs or meet demands made by potential homebuyers could hurt your market value or cost you a sale.

6. Pest control costs

Pests are a real concern for many homeowners. Over time, all sorts of critters—like termites, ants, spiders and rodents—might invade your home. Depending on how serious the problem is, you might need to fumigate your house.

If you’re interested in buying a home, make sure you hire an inspector to check for bugs and termites that could cause structural damage. While lenders don’t always require homebuyers to pay for pest inspections, it’s important to have one done. You don’t want to close on a house only to find out later that there’s an issue. Termite inspections generally cost between $75-$150, according to Angie’s List.

Build a rainy day fund!

It’s always better to be prepared for a storm than to be caught in a downpour without an umbrella. Despite the high costs, owning your own home can be a rewarding experience.

Hope for the best and prepare for the worst by keeping enough money in your savings account to cover unforeseen costs. Make sure you account for all of the hidden expenses and fees associated with buying a home and budget accordingly.

By the Experts at Hippo, RISMedia’s Housecall

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For Buyers, Credit Matters—but How Much?

Borrowers not as creditworthy as others often have higher mortgage payments; in fact, according to an analysis recently released by Zillow, the average borrower categorized with credit as “fair” can be on the hook for $21,000 more than a borrower with an “excellent” score.

Here’s how: Borrower A has a credit score that’s stellar (“excellent”), and obtains a 4.50 percent rate. Borrower B has a credit score that’s less than stellar (“fair”), and obtains a 5.10 percent rate. If both have a 30-year mortgage and a home with a median price tag, over the course of the loan, Borrower B has $21,000 more to pay than Borrower A.

Across the largest markets, the differences vary:

Zillow_Credit_Scores

“When you buy a home, your financial history determines your financial future,” says a senior economist at Zillow. “Homebuyers with weaker credit end up paying substantially higher costs over the lifetime of a home loan. Of course, homeowners do have the option to refinance their loan if their credit improves, but as mortgage rates rise, this may be a less attractive option.”

Mortgage rates have risen since the start of the year, recently hitting a point not seen since 2011, according to Freddie Mac.

For more information, please visit www.zillow.com.

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How to Ensure You’re Buying the Perfect Home

For most people, buying a home is the biggest investment they’ll make in their life. Not only is it a huge financial undertaking, but your final choice is a decision you’ll be living with for the foreseeable future. The process may sound daunting, but by taking the right steps, buying your perfect home doesn’t have to be stressful.

What Is a Perfect Home?

The first step to ensuring you’re buying your ideal property is identifying what “perfect” means to you. It may sounds obvious, but the easiest way to start is by making a list of your priorities. What is a “must-have,” what would be nice and what isn’t important? If you’re buying with a partner, make sure you compare lists and decide what can be compromised on and what will be the deal-breakers.

Experience is key here—we’ve all lived in places that at first glance we thought were suitable, only to find out later that the kitchen we initially thought was cozy was actually far too small for our needs, or that the seemingly bright living room only gets direct sunlight for a few hours a day. Don’t be afraid to ask friends and relatives about their experiences either, as they may be aware of something you hadn’t thought of.

What Can You Really Afford?

Before scouring the market for your ideal property, you need to know what you can afford.  By getting pre-approved for a mortgage first, you’ll know exactly how much you can borrow based on a professional assessment of your finances. Ultimately, this will make the whole process much easier. A trap that many buyers fall into is assuming that the maximum amount they can borrow is what they should spend on their new house. Look at what your monthly repayments would be and ensure that your budget factors in all ongoing maintenance costs, any fees you may incur from the buying process and any improvements you may want to make in the future.

Your budget should also allow you to put funds aside each month for emergency maintenance. If your heating system fails one winter, do you have the savings to fix it? Lastly, think about any potential changes to your income you may face in the next 5-10 years, how they could affect your ability to make payments, and whether there are any safeguards you can put in place.

Choosing Your Professionals

Purchasing a home can be extremely difficult without assistance from industry professionals; having the right team can be the difference between a smooth buying process and a costly disaster. Hiring a real estate agent provides numerous advantages. An experienced REALTOR® can find properties that you may otherwise miss, negotiate prices and recommend lenders. They’ll also be able to answer any questions you may have about a property, as well as any you may not have even thought to ask.

When it comes to lenders, be aware of the different types of loans available to you and how they can impact your long-term finances. Just because one lender is prepared to loan you more money doesn’t necessarily mean they’re your best option.

Location,

It’s not uncommon for buyers to find their perfect home, only to discover too late that the area it’s in is far from ideal. Take note of what you like about your current neighborhood and what you would change, and bear this in mind when scoping out potential locations. Take the time to explore the two-mile radius surrounding the property. Drive around in the daytime and at night. Would you feel safe and comfortable walking around the neighborhood at these times? Test your commute between the property and your workplace during rush hour. Could you do it every day?

You can even spend a Saturday afternoon driving through the neighborhood, asking your potential neighbors how they feel about the area.

Finally, remember that just because certain aspects of the location won’t affect you, it doesn’t mean they won’t be important to someone else if you decide to sell the property in the future. Even if you don’t have children, being in a good school district can add up to 20 percent to your house value.

Do Your Homework

Carrying out thorough research on a property and area before you buy can take time and money, but the benefits far outweigh the cost. Look at general property values in the local area and study how they have changed recently. What are similar homes in the neighborhood selling for? This will help you decide whether the asking price is fair and could indicate what may happen to the value of your property in the future.

A professional home inspection will cost a few hundred dollars, but could end up saving you thousands in the long run. If they find any potential issues with the home, you can request the seller makes repairs on the property, or use it as a bargaining tool to lower the price (and cover any costs the repairs may cost you). It’s also worth having a map of the property; a survey of the land means you’ll know exactly what you own, which can resolve any possible border disputes should they arise.

Buying for Tomorrow

A perfect home isn’t just for now; it’s for the future, and there are two ways to look at this. Firstly, it’s important to visualize whether you can see yourself living and growing there. Try and imagine yourself and your family in each room and whether it feels “right.” You also need to look for the potential in the property if you decide to expand or refurbish parts of it. You might not be planning to do this anytime soon, but it’s important to know you’ll have the option later on.

The flip side to this is remembering that a dream home is something you build yourself. Don’t get put off  by superficial things like the color of the walls or the shade of the carpets. In the long run, these things can be changed relatively inexpensively. Not all houses are going to be in the best condition when you see them, but, with remodeling, you can add your own style and touch to a home and truly make it yours. Remember that houses are generally not perfect to begin with, and there will always be things that could be different. If you’re flexible, it’s easier to move in and start creating your dream home.

by: Eliot Ward, RISMedia’s Housecall