Thursday, September 24, 2009

Budgeting for Home Ownership

If you’re a new homeowner or looking to buy a new home, it can be easy to get in over your head. As we discussed earlier, homeowners don’t often factor in the costs of additional items such as HOA fees, property taxes, utilities, and other expenses in addition to the base mortgage. As a result, many new homeowners find themselves in over their heads from a financial perspective.

When budgeting for home ownership, make sure to factor in all the costs associated. This includes the items mentioned above, as well as appliances, maintenance, savings for the “rainy day” fund, furniture, and landscaping. It’s easy to overlook some of these smaller expenses, but they all add up very quickly. It’s also easy to underestimate the cost of home items.

As a rule of thumb, set aside 10% – 15% of your mortgage and property tax for additional home expenses, If you don’t have this much to work with, it’s time to really dig down into your budget to make sure you can afford the home. This is also a good time to see how you can trim unnecessary expenses and identify areas for savings.

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