Home ownership has numerous financial and emotional benefits. Having a place to call home – and call the shots – provides peace of mind while also being an investment vessel. There are drawbacks, but many of them can be avoided – or at least anticipated – with some careful planning and guidance.
For most, purchasing a home is the largest financial decision they will ever make. It is not to be rushed into. It’s important to understand the purchase price is by no means the last money you’ll be spending. In fact, it’s just the beginning.
In addition to the purchase price and its subsequent mortgage payments, you need to consider yearly property taxes, casualty insurance, monthly utility costs and how you intend to maintain or improve the home’s condition.
As an example, the current tax rate for real estate in Hardin County is 91.117 per thousand, so you’ll pay about $9 for every $1,000 assessed. A $100,000 tax assessment results in a $911 property tax bill in your mailbox come November.
Routine property maintenance is something many enjoy and is a seemingly minor task, but it’s also a very important aspect of keeping a home in good shape and avoiding costly catch up later. Mowing the yard, trimming bushes, raking leaves, cleaning/checking gutters and other activities are viewed by some as a good excuse to be outside and by others as a hassle.
Minor maintenance becomes a major repair when it’s ignored and ends up costing you more than if you had just kept up with it in the first place. The nearly constant need for maintenance is one of – if not the most common – reasons I hear from people who are getting older and have decided they are ready to sell. The idea of owning a few acres can be appealing, but if you can’t keep up with it, then you are setting yourself up for a headache.
Your level of physical ability isn’t the only factor. If you work long hours or have other time-intensive commitments, the amount of routine maintenance a property requires should be one of your primary factors when shopping.
A new home generally will be move-in ready, with little work needed other than cosmetic personalization. An older home, whether 10 years or 100 years old, is going to require careful examination prior to locking yourself into the purchase.
Depending on the overall real estate market, you may or may not be able to find a “deal” depending on how much work you can stomach. You’ll want to consider the potential cost of getting the home up to your satisfaction and make sure you can still justify the price.
Purchasing a home at or near its current market value and then sinking thousands of dollars into a remodel generally isn’t a sound plan unless you intend to stay in the home for a long time. Even then, the best laid plans have a pesky tendency of changing, so it’s not advisable to go upside down in a property thinking you’ll be there for the rest of your life.
The age of the roof, HVAC, windows and other systems need to be considered. Items such as these eventually require replacement and you can’t expect to get a dollar-for-dollar return on the money spent.
Updating or upgrading systems improve efficiency and certainly make your home more appealing from a buyer’s perspective, but you won’t see a dollar-for-dollar increase in the value since these items essentially are expected to be in good working condition in order for the home to be considered functional.
Ultimately, home ownership is a sound goal and one of the most rewarding life experiences a person can have. As a real estate professional, I certainly don’t want to discourage anyone from purchasing a home, but I also don’t want anyone to walk into it without understanding the responsibility it entails.