Home Costs for Planning a New Homeowner Budget

Home Costs for Planning a New Homeowner Budget

Homeowner Budget

Why discuss a homeowner’s budget? Because there are expenses many first-time buyers don’t think of when talking to lenders about how much home they can afford. Your lender will discuss the mortgage payment (usually estimated to include your actual mortgage, property taxes, and can include mortgage insurance (PMI), and perhaps even your homeowner’s insurance bundled together), but they don’t often discuss the actual costs of buying, owning, and operating a home. We’ll help you plan your budget so that it includes most or all of the possible costs, so you can see more accurately how much home you can comfortably afford!

Home Costs, Recurring

Home Insurance. If this isn’t rolled into your mortgage payment, then your mortgage probably requires you carry a certain amount of home insurance. DO shop around for the best price, and see if you can get a better deal by buying car and/or other types of insurance from the same company for overall savings. Home insurance in Ohio starts around $1,000/year and can run much higher if your home has a higher value or is in an area where frequent claims are made.

Homeowners Association or Condo fees. If you purchase a condo, you’ll pay a monthly fee to help pay the costs of maintaining common areas and green spaces. Fees vary widely, so be sure to ask about monthly fees before you make an offer. If you purchase a home in a planned or gated community or in a neighborhood with an active civic association, you’ll pay a fee that could be as small as $10/year, or upwards of $300/month, depending on what is covered and what the association has voted to charge members. You may be asked to pay a one-time transfer fee, too. Membership may not be voluntary, so ask your REALTOR.

Property taxes. These are paid monthly, and are often paid in advance to your lender, who bundles the cost with your mortgage. If you have a mortgage where you are responsible for paying your property taxes separately, you’ll need to add the taxes into your monthly or annual bills. The property taxes on residential property are available to the public, and are often on the descriptions of homes for sale. If not, check with your REALTOR, they can find out for you. Bear in mind, that the tax cost may increase if the sale proves the value of the home has increases significantly since it was last purchased or assessed.

Lawn care and snow removal. Are you planning to mow, seed, and feed your lawn yourself? Do you enjoy shovelling snow and raking leaves? If you know you don’t have the time or patience to do these chores yourself, consider budgeting for professionals to do the work. Lawn care in Central Ohio runs from $60-300 per month, depending on the size of your lawn, and snow and leaf removal can be similar, depending on weather and the number of trees or length of the driveway on your property. Many contractors offer fast, accurate estimates that let you plan your budget before you buy your home.

Utility bills. Some costs, such as water, electricity, natural gas, and security systems are mostly the same from owner to owner, so asking about utility costs during the search and buying process will give you an accurate idea of the costs for those items. Others, such as cable, phone, and internet, are based on your preferences and product choices. You may be able to estimate those now, by what you already pay.

Home maintenance. It’s wise to budget savings for home maintenance and repairs. Some expenses, such as furnace filters, are a quarterly and regular expense. Others, such as replacing a broken water heater, are once in ten years, but are predictable based on a good home inspection. Planning ahead to have savings available for those planned maintenance and emergency repairs is smart, and saves you money over the long run.

Home Costs, Non-recurring

Closing costs. These are the fees you pay when you close on your home. They cover various services such as credit reports, appraisals, surveyors, and more. Closing costs are usually between 1-5% of the cost of your home. You can negotiate to have your seller pay them, but if they won’t, you’ll need to budget for them.

Utility fees. Most utilities charge a fee for starting service for a new customer, or switching that customer from one address to another. They tend to be small fees, but can add up when you have 5 or more. Check with local utility companies to see what their fees are and if there are ways you can reduce or avoid those fees.

Homeowner purchases. Most homeowners discover the need for purchases to customize or maintain their home to make it functional for them. Blinds and window treatments, paint, and even medicine cabinets and mirrors may need to be purchased to make your home comfortable. A lawn mower, snow blower, gardent tools, and a tool kit are useful for maintaining your home, and you may end up adding a stepladder and other hardware store purchases to your list. You also might be surprised at how many trash cans, storage bins, light bulbs, and other supplies a new home will need as well. Some of these purchases can wait, such as a snow blower if you close in June. Others will be needed even before the move, such as paint to convert an office to a baby’s room, so add these expenses to your budget as needed for your new home and your schedule.

Home repair or alteration. If your purchase of your new home includes the plan to remodel the kitchen, repair a porch, add a fence, or change from electric to gas for heating or cooking, make sure that you include the cost of that change (or saving for that change) in your budget, especially if the change to the home is necessary to safety or basic comfort. DO consider having your prospective home inspected during the buying process by a licensed, professional home inspector so that you know exactly what repairs or changes you need to plan on budgeting. If the needed repairs are too large for your budget, you can begin your home search again.

Furniture and appliances. If the seller is planning to take their major appliances with them, you’ll need to budget for replacements. Are there more bedrooms or is there more space in the new house than your old one? Budget for furniture purchases to make those spaces useful and comfortable. While some rooms (a baby’s room) can remain empty until later use, you’ll want to make most of your new home usable right away. Your current furniture may not fit the spaces in your new home, this can create an urge to shop. Plan ahead, thoughtfully, so you are prepared for those expenses.

In Real Estate, Timing is Everything!

Real-Estate-Timing

You’ve heard people say that real estate is all about location, location, location…we agree, but we’d also add that in real estate, timing is everything!

Buying and selling real estate is time sensitive from beginning to end.

Here is a list of ways that timing is critical to real estate sales and how both you and your agent can affect both the finances and the stress level of a sale simply by managing the timing.

Timing the market.

Your Realtor can give you up-to-the-minute advice on the best time to sell or buy in your specific real estate market. The Columbus Team knows each Central Ohio neighborhood well, and we can tell you if it’s a good time to buy, sell, or wait.

Are you ready?

It’s important to be ready to sell or buy when the market heats up. Look on our website for tips about getting your home ready to sell or organizing your finances to be ready to buy. We are happy to consult with our clients to let them know exactly what steps they should take to get ready in time! The faster you can act in a hot market, the better.

Show time!

If you’re selling your home, it’s important to have your home ready to show when potential buyers want to see it and for open house sessions. A home that is uncluttered, clean, and ready to show is more likely to attract buyers, more likely to bring in multiple offers, and will sell for a higher price than an untidy home…or one with the owners still there. It’s worth the effort to have your home ready on time and to be elsewhere while it’s being shown. The effort to manage your time as a seller can pay off in real dollars and cents.

Timely responses.

Whether you are buying or selling, it’s important to respond to offers and counter-offers in a timely manner. Delays can convince either party that the offer is not sincere, and make negotiations that much more difficult. We’ve seen buyers move on to make an offer on another home when sellers delayed a response, and buyers have lost their dream home to a competing offer from someone who responded quickly during negotiations. Keeping an eye on the time limit for responses is important to a smooth sale.

Deadlines.

You need a Realtor who stays on top of the buying or selling process and ensures deadlines are coordinated, tracked, and met for offers, lenders, inspections, repairs, and more. It’s more than good customer service, it’s vital for a smooth transaction and an enjoyable buying and selling experience.

The Columbus Team knows that in real estate, timing is everything, so we keep a close eye on the market and manage transaction deadlines so that your sale proceeds as smoothly as possible. Our Team members are also experienced in guiding you on how to manage your time during your purchase or sale so that your stress levels remain low and your satisfaction with the sale is high.

Do you have any questions about timing? Contact The Columbus Team today, we would love to hear from you!

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Home Inspection FAQs

Home Inspection FAQs

Getting a professional inspection of a home you are planning to purchase is a very smart choice. An inspection will cover visible parts and systems in the home from roof to basement, and lets you know about both current and potential issues so that you can make informed decisions with your Realtor.

The Columbus Team has gathered some Home Inspections FAQs (frequently asked questions) about the home inspection process, to give you the answers you need. Did you have a question that’s not on our list? Please contact us, we’ll be happy to find the answer to all of your questions.

  1. What does a home inspection cover?

    Typically, a home inspection will give you a ton of important information about your prospective home. The condition of every visible part of the home from the roof, the amount and R-value of the insulation in the attic, exposed plumbing and wiring (including the electrical box), down to the drainage around the foundation and the foundation itself. It should give you the age, condition, and life expectancy of major home systems such as heating, cooling, whole house fans, water heater, electrical box, and mechanical features such as garage doors, gates, pool pumps, landscape watering and lighting, and elevators. The inspection should also test every electrical outlet, smoke and carbon monoxide detectors, faucets, toilet, and shut off valves.

  2. What does a home inspection not usually cover?
    Typically, a home inspection does not cover anything out of sight, such as plumbing and wiring inside the walls, and most do not cover things like termite inspections or radon detection…although some inspectors are specially certified to do these specialized tasks.
  3. How should I choose a home inspector?

    Many people ask their Realtor for a recommendation, others find an entirely independent inspector. We strongly advise that however you choose your inspector, choose one that is certified by ASHI, the American Society of Home Inspectors. This is an indication of thorough training and professional standards, which we feel will give you the honest, careful inspection you want before you purchase a home. Home Inspectors in Ohio do not HAVE to have a license, so be careful to ask if they have ASHI certification. Some ASHI certified inspectors also have other credentials, such as an engineering degree or experience as builders and contractors.

  4. How do we get the information from the inspection?

    Your home inspector should offer a written report with all of the relevant information printed out for you. This can be useful long after your purchase, when saving for upcoming repairs or remodeling, the report will have information that will be useful for you and your future contractors.

  5. Is the home inspection report a guarantee?

    No, the home inspection report is completely accurate for the day in which it was completed, but not a guarantee or warrantee. For example, a strong windstorm the evening after your home inspection could leave damage to the roof of the home that the inspector could not have predicted.

  6. Is the home inspector the only professional I need?

    If your home inspector is not certified for additional tests such as radon detection or well, septic system, and termite inspections, you’ll want to hire separate professionals for those tests. Your home inspector may also see something he or she feels needs special evaluation, if so, they will recommend finding a specialist for anything outside their area of expertise. A non-standard configuration of an electrical box, a dark spot or sagging on a roof, all can trigger the home inspector to suggest bringing in another expert.

  7. Does the home inspection affect my home warrantee?

    Some home warrantee companies want to see a copy of your home inspection before paying a claim. This shows them the item or system WAS in working order when you had the home inspected. This can save you time and energy, as the report can stand as proof that something broke after the sale, or at least after the inspection.

  8. Who pays for the home inspection?

    The potential buyer pays for the inspection. This helps ensure the neutrality of the inspection.

  9. How much does an inspection cost?

    It varies from company to company, and can range from $250 up to $1,000, depending on how many extra tests are run. We strongly recommend that you only choose ASHI certified inspectors. After that important fact, other factors are up to you.

  10. What if the house fails inspection?
       There is no pass or fail, only information. You use the report to decide if the house is right for you. If there are issues, we can help you negotiate with the seller to have the seller make repairs, you can offer a lower bid with information about how much you expect repairs to cost, or you can choose to look for another home.
  11. Is there ever a good reason to skip the inspection?
    In our view, no. The Columbus Team wants you to be an informed buyer who is aware of the condition and functionality of the home you want to purchase, so that you are happy both before and after the sale!

Any further questions? Please contact The Columbus Team for answers!