February 20th, 2016 11:10 AM by NE TEXAS REALTY GROUP
9 Home Expenses You Have to Budget For
Article Shared From Trulia
If you think qualifying to buy a
home takes financial stamina, budgeting for your home month by month and
sticking to a long range plan can require the strategy and dedication of a
Ideally, lenders recommend that no
more than a third of your income should go toward housing costs. Here's what
you spend those dollars on:
budgeting: recurring monthly expenses
If you successfully figured out how to save for a down
payment and budgeted your income to pay off
debts like student loans and credit cards to qualify for a mortgage, you may
feel like once you've bought a house you can relax. The reality, however, is
that home budgeting doesn't stop when you close on your house. That was just
the practice run. For as long as you own a home, exercise similar strategies to
those you used when your goal was to buy. They can help you manage your income
to cover recurring expenses like these:
The Bureau of Labor Statistics'
Consumer Expenditure survey indicates that 58 percent of the one third goes to
pay your mortgage. If you have a fixed rate mortgage the payments remain the
same, but escrow payments that can include property taxes, homeowners'
insurance premiums, and private mortgage insurance fluctuate. Payment amounts,
therefore, are adjusted by your lender periodically to cover increases.
They increase with the value of your
home but are tax-deductible
Typically insurance premiums
increase each year. You may want or be required to have supplemental insurance
for disasters such as floods and earthquakes, or elect to increase your
coverage if you acquire more valuables. Shop around if this severely stretches
Private mortgage insurance (PMI).
If you purchased with less than a 20
percent down payment, you may be required to pay PMI for several years until
you build at least 20 percent equity, or for the life of the mortgage. Double
check with your lender for how long you must pay.
Homeowners' association (HOA) dues.
The amenities and services provided
by an HOA vary considerably. They may or may not include full or partial
landscaping services. HOA dues can increase as their budget requires.
These include your power bill,
heating fuel, water, sewer, garbage, phone service, cable, and/or internet, all
of which can increase.
But that is not all, oh, no. That is
for your home maintenance, emergency repairs, and upgrades
You don't buy a house just to pay
the expenses listed above while you let it fall down around you. It's probably
one of the largest investments, if not the largest, you'll make in your
lifetime. You want to maintain its value, and when possible, improve and
enhance it. If that one-third portion of your income seems bursting at the
seams already, put your money-saving skills to work because you need to put
something aside for the following expenses:
Budgeting for regular maintenance.
Routine maintenance includes
inspections, replacing worn parts, cleaning, and landscaping. How much do you
need to save for maintenance costs? Traditional advice says you can expect to
spend annually from one to two percent of what you paid to buy your home, but
if you bought an older home, a fixer, or a foreclosure in poor condition, it
can likely be more. For a closer estimate, however, consult a home maintenance
checklist and price out the current cost
of these services in your area -- or the price of necessary tools and supplies
if you plan to do routine maintenance yourself. Include cleaning supplies and
associated costs, too. Add them all up and divide by 12 to establish a budget
and a monthly savings plan for routine maintenance -- things like changing HVAC
filters and annual inspections, gutter cleaning, window washing, and roof
Fund for emergency repairs and
If you know the age of the various
components of your home such as the roof, large appliances, furnace, windows,
and wiring, for example, you can figure their remaining life expectancy by
consulting the longevity chart for home
components from the International
Association of Certified Home Inspectors (InterNACHI). Research the approximate
cost of replacing them, then prioritize budgeting based on when they might conk
out. Establishing this type of emergency fund, especially if you expect some of
them to need replacing at the same time, can help you manage some hefty
expenses when the time comes. If you can't make necessary repairs or
replacements and try to sell the house first, you may take a hit on the selling
price or even lose buyers if a home inspector reveals that your house needs
Saving for home improvements.
Even if your new home is move-in
ready, most homeowners have a wish list for future renovations or necessary
additions. Prioritize yours on the basis of your home's condition -- is the
roof leaking, for example? -- then on your comfort or family growth. If you
have anything left in your monthly home expense budget, put what you can aside
for that dream kitchen, bathroom remodel, or attic bedroom each month.
Buying a home can be one of the best
decisions you make, but if you're a first time buyer, you need to prepare
yourself for the financial demands. Serious budgeting -- and sticking to your
budget when consumer distractions abound -- takes fortitude. Are you up for the