The Expenses of Being a Homeowner
Whether to rent or buy a home can be a big financial decision. Most people see owning a home as a growing investment or simply see owning a home as an important life achievement. Other times, people rent for flexibility and the minimal responsibilities and benefits it comes with.
However, with many people in debt and unable to afford mortgage payments, renting may be a more viable option. Traditionally, we’ve been told owning a home is the dream; however, owning is not always better than renting. Whichever route you decide is best for you, it’s essential to understand the whole picture and the costs associated with being a homeowner.
Though obvious, mortgage payments are likely going to be the most significant expense you’ll face as a homeowner. Mortgage payments will likely be the most expensive debt they will ever own.
Your monthly mortgage payments will include payments toward your principal balance and the interest you’re charged for borrowing the money. Interest rates fluctuate, and rates depend on a range of factors.
For example, if you’ve made a twenty percent down payment on a $250,000 house, your principal and interest payment would cost roughly $950 a month. Over a period of thirty years, you will have ended up paying double your home’s original purchase price.
If your down payment is less than a certain amount, usually twenty percent, most mortgage lending companies will require you to have mortgage insurance. Mortgage insurance is a policy to protect the lender should the borrower fail to make payments or is financially unable to pay the mortgage.
Mortgage Insurance can add hundreds of dollars to your monthly mortgage payments. The amount you’ll have to pay depends on the type of policy, your credit rating, down payment, and the loan terms.
When you purchase a home, you should prepare to pay for additional expenses. Typically, home-buyers should expect to pay between two to five percent of the home price on closing expenses.
The down payment and the various fees that come with a real estate transaction can end up putting a dent in the bank. Some closing expenses include land transfer tax, which is a percentage of your home’s purchase price, legal fees and disbursements, and mortgage insurance.
As a homeowner, you’ll be expected to pay property taxes every year. Property Taxes generally cost between 0.5 and 2.5 percent of the value of your home. It can be calculated by multiplying the assessed value of your home by the tax rate; the tax rate varies and depends on the location you reside in.
Property taxes are used to pay for services such as snow removal, garbage pickups, road maintenance, policing, recycling collection, and more.
Repairs and Maintenance
Over time, all homes need a certain amount of repairs and maintenance to keep them up to date. However, suppose you ever find yourself facing a leaky roof, broken air conditioning, mowing the lawn, or major electrical issues. In that case, you are expected to cover one hundred percent of those expenses out of your pocket.
In some houses, certain roofs with asphalt shingles are to be replaced every ten to twenty years depending on the quality, the cost of replacement can cost homeowners up to $16,000. Those who choose to rent can take advantage of not paying for any additional services like plumbing and handyman services.
Looking to Sell?
Have you ever said, “I need to sell my house fast, Kansas City“? Look no further: KC Property Connection wants to help you do just that. We are a home buying company, and we offer a more comfortable and faster way to sell your house in Kansas City.
We help homeowners going through a stressful, tiring, and financially strained homeowning situation to sell their home fast for cash. With us, you don’t have to worry about paying for any repairs, closing costs, or real estate fees; we cover all the expenses and buy houses in any condition.
Our process is as simple as it gets: gives us a call to submit your information and let us come by to see the property, after which we will then present you with a cash offer, and you get to choose the closing date.