When the time comes to buy your first house, there's a lot to think about. Will you plant rose bushes or an apple tree? Should the living room have a red or blue accent wall? However, before you can have the fun of landscaping and decorating your first home, you need to figure out how to pay for it. Devising a household budget that deals with a potentially higher mortgage payment and the added expenses of home ownership.
Your mortgage payment isn't the only thing that can go up when you buy a house. Home ownership means all kinds of new expenses since you won't have a landlord paying your garbage bill, replacing your furnace's air filters, or mowing your lawn. Plan accordingly.
Repairs and Maintenance
Owning a house also carries longer-term expenses like keeping the house itself up. While diligent maintenance can extend the life of your home, most houses will eventual need things replaced. Putting aside at least one percent of your home's value per year is a good way to get started, so, if you're looking at a $150,000 house, you might want to consider depositing an additional $125 per month in your special account to cover any large maintenance issues that may arise. For example; a new water heater or furnace. These are larger expenses that can not wait to be fixed once they go down.
Down Payment and Moving
Your lender or the seller can help you with closing costs, but you'll need to have some form of down payment as well as enough saved to cover moving expenses and getting utilities set up in your new home. Usually, the mortgage lender wants to see that you have the money to close well before you get to the closing table.
Help from the IRS
While owning a home can be expensive, the Internal Revenue Service gives homeowners certain tax breaks. Your mortgage interest and your property taxes are tax deductible, if you itemize your deductions. When you itemize, you give up the ability to claim your standard deduction, but you also get to deduct more than just your mortgage expenses. Talk to your tax advisor!
Being a homeowner can be exciting so don't be blindsided with unexpected expenses.
~Your friends at JB Home Inspection
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