Avoid the Shock of Homeownership Costs

Buying a home means it's in great condition, right? Wrong! Evaluating a home's key features is an essential part of the home buying decision.

There are so many things to consider when buying a home from "Can I afford the monthly mortgage payment?" to "Is this the right neighborhood?" and "What school district will I be sending my kids to?" that sometimes the last thing on your mind is "Will the toilet flush?" You aren't alone. Not anticipating the cost of home maintenance is a very common oversight among homebuyers. Many first-time homeowners are shocked when they see how costs add up. Plus, minor improvement costs to make a house become your home add up quickly as well.

How much should you budget annually?
A recent HomeGain survey reports that U.S. homeowners think it's wise to annually save between one and three percent of your home value for repair and maintenance. This means that if you paid $250,000 for the house, you should save approximately $5,000 for the year.

Ask experts to help you calculate how much it will cost to maintain the property before it becomes your responsibility. It may require that you get bids from contractors (plumber, roofer, electrician), but it may be worth it in the long run. Ask your agent if the seller has had contractors work on the property, and if they are willing to speak to you. They may be able to give you a good inside look at current and future maintenance costs.

5 Home Features to Evaluate
If your real estate agent isn't telling you what to look for, you'll want to make sure you evaluate the cost of these five things before you buy the home.
  • Plumbing - Find out what type of pipes and water heater the home has and when they were last updated. This includes the kitchen, bathrooms and laundry room. You can ask the neighbors to see if there have been any issues with the overall neighborhood pipes and drains. Beware of clay pipes, and relax if you hear the word copper.
  • Electrical - Consider what kind of appliances and technology you'll be using in the house, and how often. If you have multiple TVs and computers running, while doing a few loads of laundry, you'll want to make sure your wiring can handle it. New wiring in a 2-level home can run anywhere from $4,000 and up.
  • Roof - Examine the type of roof, including the type of tiles, the shape and gutter system. Consider having a professional roof inspection conducted by a roofer. Inside the house, look for signs of leaking on the ceilings, especially if there are skylights. New roofing estimates can run as high as $25,000. However, the good news is that a roof's life span can be 5-15 years, depending on the environmental conditions.
  • Foundation - Foundation problems often appear on the exterior of a building, in the form of cracks in mortar or bricks. On the interior, these problems show up as sticking doors or sheetrock cracking. You'll want a professional inspector to analyze the condition of the foundation because the cost of repair could be steep in the tens of thousands of dollars.
  • Heating - Determine the age of the furnace and, if possible, the brand. If it's a rare brand, you may have difficulty finding replacement parts. Keep in mind, monthly heating and utility bills will vary from one month to the next, especially in comparing the summer and winter months.
Get a Thorough Inspection
It is a good recommendation to hire an experienced and reputable home inspector to do a thorough inspection of the home you are thinking of buying. Your REALTOR® will be able to provide you with names of several licensed and bonded companies in the area who can conduct an inspection for you. Or contact the American Society of Home Inspectors http://www.ashi.org/ to locate a member in your area.

Tell the inspector that you are interested in learning about the current condition of the property, as well as give you an idea of when to expect making some of the major replacements and repairs.

Naturally, some homes cost more to maintain than others. Older homes usually need more maintenance than newer homes, even if it has been recently renovated. Also, don't assume that because a home is new, it won't need any maintenance for a while. All homes need to be attended to on a regular basis to keep them from falling into a state of disrepair. Unless you rent or pay condo maintenance fees, you can anticipate making upgrades in the future to your home. Knowledge is power, and the same can be said for homeownership. The best way to avoid the shock of homeownership costs is to prepare yourself mentally and financially.

Good luck with your new home!