Homeownership has long been the cornerstone of the American Dream. Unfortunately, that dream can easily turn into a nightmare if you’re not careful.
The cost of buying a home and keeping can be tough. That’s why you need to stay on top of things. Here are 10 examples.
1. Maintenance
If you’re a renter, you can simply call the landlord when something breaks. If you’re a homeowner, you’re on your own.
You’ll either have to pay a professional to come out and fix problems — or pick up the tools, supplies and skills needed to make a repair yourself. You never know when a repair might suddenly become necessary, and some of them can be very expensive.
A home warranty is one way to keep your home running smoothly and your budget intact, especially if you’re not handy. There are plenty of home warranty companies out there. Here's one popular one you can check.
2. Your mortgage
Be smart — and honest with yourself — when you take out a home loan. Can you really afford the mortgage?
Finance experts usually recommend that your monthly mortgage payment shouldn’t exceed 20% of your gross monthly income — or certainly no more than 25%.
Also, avoid taking out a 30-year loan unless that’s the only way you can afford your mortgage payments. You don’t want to be planning to retire, only to realize you still have a huge mortgage to finish off.
And when you’re looking for a mortgage, make sure you get the best deal. Use a loan shopping site like Better. They’ve eliminated most of the hoops you had to jump through in the past, so it only takes a couple of minutes to shop for the best rates, fees and terms.
3. Rising property taxes and insurance
Homeowners have to pay property taxes, and depending on where you live, it can cost a ton. Same with insurance. Values going up in your city? Your local government will likely raise property taxes and insurance companies will also charge more.
Unless you want to sell your house, you’ll need to find a way to pay.
We can’t help with property taxes, but try to shop your home insurance once every year or two. You can do it in a few minutes with tool like Money.com's home insurance comparison site
4. Keeping up with the Joneses
Your home might be big and beautiful, but try not to fall into the trap of taking on a more and more expensive lifestyle than you can truly afford — just to keep up with your neighbors and friends.
Resist the urge to buy trendy new home furnishings and appliances, the trendiest new gadgets and devices, and so on. You’ll only go deeper into debt or struggle to make ends meet.
5. An oh-so expensive kitchen
You may want to remodel your kitchen. But tearing out your kitchen cabinets and putting in new ones? You’re looking at spending at least $20,000.
Switching out countertops means thousands more. Include new appliances and you can be looking at $50,000 or more.
If you just replace the things that are truly old and outdated, you won’t have to spend nearly that much.
6. More expensive items for your home
If you want to avoid lifestyle inflation, resolve to stop buying the next cool item — gaming system, hot tub, entertainment center, etc. — just because you want it.
Get the best product you can afford. But research whether some extras — like a bread maker built into the oven — are worth the extra cost for you.
7. Selling at the wrong time
If prices for homes in your neighborhood are at or near record highs, maybe selling before prices come down is a good idea, especially if you’re considering doing so in the not-too-distant future.
Home prices most often drop or slow down when high interest rates price more buyers out of the market.
8. Spending more to increase your home’s value
Don’t immediately start putting money into updating your home and bringing it closer to modern standards.
If possible, make sure that work will ultimately increase your home’s value by at least as much money as you’ve spent — if not more.
9. Gardening
Plants and other landscaping are a good way to improve your home’s curb appeal, but it may not be as cheap as it first appears.
Plants need water, fertilizer and maintenance. When you’re buying, ask for the lowest-maintenance plants that are also appealing.
10. Grass isn’t as cheap as it used to be
Most lawns in the U.S. are covered in grass. That’s a simple and cheap way to landscape your home’s grounds…right?
Grass can require fertilizer, pesticides, mowers, fuel, reseeding and other stuff, not to mention your time. And unless you’re in an area that gets plenty of rainfall, your water bills can be a burden.
Consider other types of lower-maintenance landscaping.
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