So you’re going to purchase your first home, or you are upgrading to something bigger. You’ve consulted a mortgage lender and they’ve told you what you will qualify for, which is sometimes more than you thought you would. And so you start your search online. Dreaming big, you hire a buyer’s agent to help you sort through the listings, and help you discover neighborhoods that are perfect for your needs. A good agent, such as Whit Harvey, can help keep you on track and on budget, because there are more things to consider than just your monthly mortgage payment. Here are our top five expenses to consider.
1. Taxes. The real estate tax rate varies across counties. For instance, a $450,000 home in Baltimore County has an average tax rate of 1.170% of the home value. That same house in Baltimore City is taxed at 1.72%. The monthly taxes are paid through an escrow account held by your mortgage lender, and could significantly increase your monthly payment. Ask to view the latest tax bill on a house you are interested in buying, and add that to your monthly budget.
2. Utilities. The home of your dreams is a gorgeous Victorian in Roland Park. The windows are original, and the furnace is outdated. You can bet that your heating bill is going to be more than it would be in a fully renovated and insulated home. Make sure you can afford those high utility bills.
3. New Furniture. Moving to your first house from a small apartment? That futon you’ve been using for a couch and an extra bed is not going to cut it in your new living room. Not to mention furnishing your dining room, guest bedroom and lower level club room. If you have to stretch to afford your mortgage payment, you are not going to have money for extras.
4. Landscaping. “Oh my, what gorgeous, huge old trees we would have in our backyard! I love it!” One word – storms. Are you prepared to take down the trees that are close to the house if they become dangerous? Even a large limb can do damage if it falls in the wrong place. It can cost upwards of $5,000 to remove a tree. Just something to consider….
5. Upgrades. Maybe the appliances are okay, if not perfect. You can live with them for a while. Of course a new bathroom would be great, but you can ignore the pink tile for now. But chances are you will at least want to paint. Updating any part of a house is ALWAYS more than you think it will be, so if you are going to want to make changes, don’t spend all of your savings on the down payment or mortgage.
Whit Harvey has been helping people make the right real estate decisions for 40 years. He’s also bought, sold and renovated several homes of his own, so he knows what things cost. Buyers can trust him because he won’t try to stretch your budget. If you’re honest with him about what you are comfortable spending, he will be honest with you about what you can afford.