May 3 2012

How to Calculate the Costs of Owning a Home

If you’re thinking about buying a home, trying to figure out your monthly expenses after you close escrow can be a challenge.  There are so many variables to consider, and it could be hard to put together a budget.  However, you need to make sure that you can fully afford the costs of owning a home before you get started.

Mandatory Home Budget Items

Here are the things that you know that you will pay that are pretty set in stone.  First, you will have to pay for your mortgage.  You can use a mortgage calculator, such as the ratesupermarket mortgage calculator, to calculate the cost of your mortgage payment every month based on current interest rates.  

Next, you will need to calculate the cost of taxes and insurance each month.  Typically you pay both of these in annual or semi-annual installments, so you should take that amount and divide it to be a monthly amount for your budget.

You can calculate your taxes by checking with the local county tax assessor and see what current rates are.  You can also shop around for home insurance and get different quotes to make sure that you get the best rates possible.

Finally, depending on where you live, you could have association dues for your home or condo.  These are flat monthly payments due to pay for maintenance of the common areas.  Just like any other bill, you can be assessed fines and other penalties for being late, so don’t forget about this one!

Variable Home Budget Items

Beyond those monthly mandatory housing expenses, you will have a variety of variable housing expenses.  The biggest expenses in this category are utilities.

You will typically have to pay for power, water, sewer, telephone, cable, internet, garbage collection, and more.  Sometimes you will be able to shop around for these services, but typically not, since it is based on the address of your property.  As such, you may be able to get a quote on the price of services so you can get an idea of how much you will pay each month.

After utilities, you will have to budget for maintenance.  If you have a yard, this includes yard service, but it should also include having a reserve set aside for repairs or other maintenance items needed.  Part of owning a home is upkeep, so make sure that you stay on top of it.

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