Tuesday, August 5, 2008

August Finance Corner

Understanding "Total Cost of Ownership"

Did you buy a home without realizing how much utilities, Homeowners Association fees, maintenance, insurance, and other costs added to your monthly housing budget? Many homebuyers look only at the price and later realize that "charming" older home will cost them $400 a month in the winter to heat.

It's easy to get caught up in the excitement of a new home search when you are ready to move, but don't trip on these sometimes hidden costs. Most are readily available if you know where to look:

  • Contact the local utilities to see what the budget billing was for the last owner. For most homeowners, this is the single largest expense after the mortgage. An energy audit may also help in determining expected usage.
  • Check the monthly HOA costs (and what's included in that cost!). You should also determine from the seller if there any upcoming assessments that could be added to the normal dues.
  • Check current tax assessments with the county auditor.
  • Check online resources or work with a contractor to estimate updates and maintenance costs. Your real estate agent may be able to assist in finding resources.
  • Talk to your insurance agent on what you are likely to pay for homeowners coverage.
  • Discuss the potential for mortgage interest deductions with your accountant or tax advisor.
The next time you move, work with your financial and real estate professionals to help you evaluate all the costs and tax benefits so you find the home that matches your desires with your budget.

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