When preparing to purchase a home, buyers need to know that there are more costs involved than the list price on the property. There are closing costs and there are carrying costs to consider. Closing costs occur one time, at the close of the sale of property. However, carrying costs are those expenses that reoccur as they are necessary for the upkeep of your home. The informed buyer will be better prepared if he knows, upfront, what costs to expect. First-time home buyers should particularly look into the carrying costs as they have not yet experienced all the financial responsibilities that go along with home ownership.
First, consider the mortgage payments. These are monthly payments that must be paid to your mortgage holder, whether it be a bank, an individual or another financial institution. Itís important to determine the amount you are able to pay, not just today, but looking toward the future. A mortgage is often the largest investment an individual makes in his lifetime.
Secondly, consider property taxes. These generally occur once a year and must be paid either to the county or city your property is in. If your property is located in the county, county taxes will be required. However, if your property is located in the city, both county and city taxes may be required.
Other things to consider that would be construed as carrying costs, would be the cost of the heating of your residence, insurance payments, any home repairs and/or maintenance fees. A good way to estimate the costs associated with carrying costs, is to talk to the realtor or owner of the home. It may be that you can view past electricity, gas and water bills to give you a good idea of how much youíll pay per month in these costs. Itís also helpful to find out when appliances were purchased and when home repairs were done so as to prepare for future repairs and appliance replacements.
These are the essential expenses that must be considered before purchasing a home in order not to overextend yourself financially.