Anyone who owns a home knows that there are a whole slew of costs associated with it. This piece from Money Central details the hidden costs of owning a home. Let's start with a basic overview:
First-time homeowners are often startled by the hidden costs of owning a home. The traditional measure of housing expenses -- PITI, which stands for principal, interest, taxes and insurance -- is just the beginning. Maintenance, repairs, supplemental insurance, home improvements and decorating can cost you thousands of dollars a year more than you expect.
Then here are some general tips and key points to consider:
What should you budget annually for such repairs and maintenance? At least 1% of the home’s purchase price, says finance expert Eric Tyson, co-author of “Home Buying for Dummies.” If you bought a $200,000 home, for example, you should be setting aside at least $2,000 a year.
Ignoring problems can cost you plenty, even if you don’t sell. A small problem like a leaky toilet easily can lead to a rotted floor, termites and mold -- all of which are much more expensive to remedy.
You may also need to buy additional coverage if you have a large collection of antiques, valuable jewelry, furs or lots of computer equipment.
Financial planners recommend borrowing money only when you’re buying an asset that appreciates in value, and home improvements typically lose value over time.
Yep, as a home owner I can attest to the extra costs of a house -- especially one that's old enough where many things are starting to wear out. Our house is 20 years old and we've replaced the carpet, paint (inside and out), roof, and dishwasher. The heater is next as it may only have a year or two of useful life left. And when you live in Michigan, you HAVE to have a great heating system. ;-)
Good information, thanks. I'm trying to gather as much information as possible to decide if I'm ready to buy a house.
Posted by: tobia | January 19, 2006 at 07:17 PM