Considerations of Homeownership
and Costs of Your Real Estate

There are many considerations when it comes to homeownership. This is particularly true when you are a first time home buyer. By listing the costs and some considerations of owning real estate, this section will alleviate your concerns about the unknown.

Stable Source of Income is Requred

Are you financially ready to buy a home? Financially ready means that you will have the money for your payments both now and in coming months. If you have a stable source of income and the desire to own a home, then you are ready to buy a home.

The only real financial concern is not having the money for the mortgage payment. Foreclosure is among the worst things when it comes to qualifying for the next home. There is no point in destroying your lifestyle by getting into a mortgage that requires your family to work four jobs. On the other hand, you have to live somewhere and if you can afford the payment, buying a home can be a better investment than renting.

Only you know the right time to buy a home. Chances are, you will pay your rent without fail until you purchase a home. Sometimes waiting to buy a home can be like throwing money away on rent. For more information about paying yourself in your own home, see Real Estate is an Excellent Investment.

Costs of Owning Real Estate

The costs of homeownership are often more than just the payment. There are other bills associated with real estate. Even beyond the financial aspect, there is usually an investment of time and energy. Here are many of the costs you can expect in your new home.

• Mortgage payment including principal, interest, taxes, and insurance (PITI)
• Utilities including gas, electricity, water, sewer, garbage, phone, cable, etc
• Maintenance expense (tools, supplies, and often some of your time)
• Services (anything you don’t do yourself such as major plumbing, yard maintenance, etc)
• Your time and money investment in projects (new paint, tile, carpet, deck, etc)
• Spending sprees after the purchase (you may want new furniture in your new home)

Some of the costs are discretionary, for instance you can decide when you are ready to add a new deck. Others depend on the age of your home and other factors. For instance, at best your home's water heater will probably need to be replaced every 10-15 years.

Some of the costs can be offset by home warranties and homeowners insurance. Josh Powell has the resources to provide you a home warranty on any home whether new or used. Any item in the home that is working at the time of your purchase can then be repaired or replaced under warranty. The home warranty deductible is usually less than $50.

Home Owners vs Renters Comparison of Costs

Many of the financial costs of owning a home are similar to the costs of renting. For instance, you will pay utilities, taxes, and insurance even if you are a renter. You will just pay it to your landlord since it is often built into your rent payment. Your landlord will increase your rent regularly.

The key difference is that you will handle your own home maintenance once you buy a home. It is both the work and the joy of home ownership to do Saturday projects. On the down side, you may need to fix your own toilet with a $12.95 part from the hardware store. On the plus side, you will learn to do projects and enjoy creating the home of your dreams.

For more on renting vs owning, see A Mortgage is Better than Paying Rent.

Don't Spend Money Until After Your Home Purchase

People often go on spending sprees after their home purchase. Just remember, don't spend money until after your home purchase. After all, Owning Real Estate Builds Credit.

The average spending after a new home purchase is around $3000. Fortunately, most of this spending is optional and just for fun. For instance, you can decide whether buy new furniture or a new car. However, you may need to spend a few hundred dollars on essentials. For instance, you may need drapes or a lawnmower.

It can be tempting to buy furniture before you are in your new home, but don't give in to the temptation. This is very important because your credit qualification may depend on it.

Some lenders check your credit and employment one last time after you sign the papers. If you have avoided the temptation to spend money, you will be fine. Then after you are moving in, you are ready to spend money again.

Just remember, you are the only one to know what else you can comfortably afford. You may even want to take a few months to get a feel for the actual expenses in your new home before buying new furniture and decorations. Besides, you may develop different tastes as you continue to shop with your new home in mind.