5 Homeowner Costs Renters Don’t Pay
Sometimes transition is necessary. Renting can be a nice financial cushion as you rebuild.
Property Taxes Property taxes are often paid to your municipal or local government, province or state to finance such things as public works, wages of government employees or state funded school personnel. Property taxes are a cost that mortgage holders can anticipate paying for the entire length of time that they own their home. While, renters may gripe over rising rents in affluent areas, homeowners must pay property taxes which are assessed based on the present estimated value of their home and this rate can change over time to reflect a home's fluctuation in value. In 2008, the national average for property taxes was $1,180 per annum.
Home Maintenance Homeowners can't just call the landlord when things go wrong to fix wear and tear for the appliances that needs to be replaced or fixed. All maintenances or repair and even renovations are the obligation of the mortgage holder. Whether you're planning a large remodeling project, or just to cover the necessary repairs, it is suggested that homeowners budget at least 1% of their home's purchase value per year towards maintenance. Subsequently, if your house is worth $220,000, you should set aside at a minimum of $2,200 for maintenance costs . A few sources even propose you need to be prepared for up to 4% for every year, which would be $8,800 on a $220,000 home.
Home Loan Interest The sum you'll pay in home loan interest over the term of your home loan relies on the time allotment you amortize your home loan over (or the quantity of years that it will take you to reimburse your home credit), the recurrence of installments and the rate of interest. Like property taxes, the interest rate on a home loan can also fluctuate over time, contingent on the kind of home loan you select. For a general idea of the amount of interest a property holder can hope to pay throughout their home loan:
In the event that you have a $220,000 mortgage that is amortized more than 30 years at a rate of 5%, you can anticipate paying generally $205,162 in interest.
Home Insurance Tenants may need to pay rental protection, yet homeowner’s protection has a tendency to be a ton more extravagant. Rental protection ordinarily covers the contents of the rental property but, property holders are concerned with the value and upkeep of the physical structure of their property as well. On the off chance that a house is lost in a flame or hurricane, protection will cover the rest of their home loan debt or the expense to revamp or repair the home. Protection arrangements offer distinctive levels of security and scope, and premiums can fluctuate significantly. For the homeowner picking up and moving on with life may prove incredibly difficult even with insurance protection, while a renter will only be responsible for the time in which they occupied their residence and may easily find a new place to lease.
Real Estate Fees The very act of purchasing a home entails a string of fees related to the purchase and it may seem for a homeowner that these fees just keep coming. Before even moving into a home, the homeowner must account for their real estate agent’s commission, title insurance and closing costs. Once in the home, you may pay for homeowner’s association fees to cover external building maintenance depending on the type of home. If you can make the huge commitment to homeownership, there is incredible potential to earn profit from the sale of your home. Just keep in mind that there are far more expenses associated with homeownership than renting than may immediately come to mind. Just because your mortgage payments are lower than your rent it doesn’t truly mean that you’ll come out ahead in the short term.
Many FAIR participants have transitioned from homeownership to renting and back to homeownership with careful guidance and strategic planning for the future. Do you need help sorting out your goals for your home? Contact a FAIR Counselor to discuss today.
