Buying a Home: It’s Not Just the Mortgage
You have been wanting to buy a home for years. You have done everything right; you put your savings in a high interest rate savings or money market account. You have weathered the real estate boom and are ready to take advantage of the current buyer’s market. You go to a lender that was recommended to you and you secure a 30-year fixed rate mortgage at 6.25% and you plan on putting down 20% of the purchase price. You go with a recommended real estate agent and find a home.
The home is a little expensive, but you can make the mortgage payments. Here comes your mistake–you did not consider real estate taxes or home insurance as fixed costs that go along with your mortgage. If you purchased a $200,000 and put down $40,000 you probably do not have a lot of money left saved up. $985.15 is your mortgage payment due each month and that was all you considered when buying. If you add property taxes of $300 a month and $45 a month for home insurance your payments have increased almost 35%–Yikes!
Maybe you can still make those payments, but now you might be “house poor.” How will you save for retirement? How will you accumulate enough money for an emergency fund? How will you really get to enjoy life and your home? So please make sure you consider property taxes and home insurance when buying a home.
Written by Nagel on October 31st, 2006 with
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