Man Vs Home Ownership Hidden Costs

The American dream, right? 

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Four years ago, we traded our 2 door car and cute townhouse for picket fences and a hound dog in suburbia. 

Here’s the real things they don’t tell you about owning a house.


 

My husband and I bought our house at age 21 and 22, respectively. Without debate, being a homeowner has been the greatest accomplishment that we’ve had. It’s also been the most expensive thing we’ve ever done.

** Before I proceed, I had a Realtor share their insider tips on buying a house in THIS POST. Check that out, too, if you are hoping to buy a house in the future.

 


Here’s some things I have learned about
owning a house over the last few years:

 

You have to be a Jack of All Trades.

Home maintenance is cheap. Hiring somebody to do it for you is expensive. We have had to take our toilet off the foundation to replace a $5 seal. We had to re-wire our hot water heater into the circuit box, replace old and loose power outlets, tile our kitchen, and sheet-rock a wall in our garage…to name a few things that we’ve had to learn to do. Most of these issues cost us less than $75 in supplies, but if we paid somebody to it for us…we’d be out hundreds of dollars.

 

There is a LOT to consider when you buy.

There’s a huge list of things you need to pay attention to inside the house, but there’s also a big list of things you need to think about OUTSIDE the house.

  • How close is the nearest fire department?
  • Where are the grocery stores?
  • Can I get out of this house during inclement weather?
  • Will those tall trees be an issue?
  • How does heavy rainwater flow through my property?
  • How much is homeowner insurance?
  • Will the neighbors annoy me?

 

Your neighbors are your friends.

child-desperate-housewives-funny-renee-perry-favim-com-1801497We signed the papers, got the keys to the house, opened the front door, and I sent my husband out to meet all of our surrounding neighbors. Why? These people have lived here longer than you and they know everything about your house that you don’t. They can…

  • Tell you how the last owner took care of things, or what issues they had with the place.
  • Let you know of problem areas of the street. Example: Six months after we moved in, a field beside my house turned into a new subdivision. Things became a construction zone and we were left with more cars/SUV’s driving on our street. We had no way to know, and the last owners didn’t have an obligation to tell us. The neighbors had my back.
  • Inform you what to expect for holidays. Does a certain house have huge gatherings that blocks the street? Does anybody give out Halloween candy? Does somebody like their 2:00 am Independence Day fireworks?

More important, they can…s02e0607

  • Can identify if something’s wrong. Seriously. They know when you’re home and when you’re not. They know your cars and your family/friends ride’s, too. Strange car in your driveway and you’re not around? They’re going to be your first line of notification, and defense.
  • Keep an eye on things when you’re out-of-town.
  • Will be the first ones to know if your house is on fire, or if a tree falls while you’re away.

 

Small Maintenance > Big Repairs.

Clean out your gutters. I’ve heard of somebody who skipped cleaning out their gutters before winter. Heavy rains came that spring, and their gutters were full of leaves. All that rainwater overflowed and puddled around their foundation. Bam. A flooded basement and $20,000 in foundation repairs. Moral of my story, if you do (often free) preventative maintenance up front, you’ll save thousands of dollars later.

 

The buck stops with you.

Did your refrigerator stop running? The carpet get torn? Is a vinyl siding panel hanging down? You can’t call your landlord (or anyone, for that matter) to have it fixed. It’s your house, so it’s your responsibility to repair it and pay for it, too.

 

Liability.

If your dog bites somebody, you’re liable. If somebody falls off your back deck or down your stairs and injures themselves, you’re liable. Did somebody underage sneak booze in your house and find themselves with alcohol poisoning? You’re liable.

“A person’s home is their kingdom.” You’ve got homeowners insurance to help, but ultimately, it’s your house.

 

Homeowners Insurance isn’t really your friend.

4580d2bbd4cd683480eb3d1277f999d9They don’t exist to replace a broken window, they exist to replace a burned down garage. You should only make a claim if you’re suffering a catastrophic loss.

Why? They will increase your rates, and if you make more than 1 or 2 claims in a small timeframe, they’ll drop you. The next company will see that you’ve been dropped, and they’ll charge you extra because you’re “high risk”.

Only make a claim if you can’t possibly ever think of paying for the incident out of your own wallet.


Here’s some of the hidden costs/facts:

Moving isn’t free. And it sucks.

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Boxes. Moving trucks. Tape.

The only thing I hate more than root canals, is moving. Whether you’re borrowing a truck from somebody, or hiring a full moving team, be sure to get quotes up front on what you think it’s going to cost. Add 15% of that for incidents (unexpected costs, broken stuff, things that apparently vaporized between houses) and work it into your budget. You don’t want to run out of money when you’ve got stuff in two places.

Likewise, juggling two house payments, utilities, cleaning, and/or a storage unit can be very trying on your bank account and your mental state. Write everything down so you can keep track of dates, and order a pizza on your first day in the new house. Spring for the paper plates and drinks, too. You’re going to need it because your dishes are in one of those 100 boxes.

 

Property Taxes & Insurance.

First things first. Property tax is completely mandatory (unless you qualify for subsidies, which…majority of us don’t). If you’ve got a mortgage, homeowners insurance is too. Those online mortgage calculators never include those costs…and if they do, it’s often a low estimate. Before you put in an offer, get quotes on property taxes and insurance. Make sure you’ve got room to spare, too, because they always go up!

 

Trash Pickup / Fire Subscription.

These are two things that I found out I need to do AFTER buying the house. I live outside the city limits (no city taxes, yay!) But in return, we don’t get certain taxpayer-funded amenities. Streetlights, for example. We also have to pay $200+ annually for curbside trash pickup, and $100+ annually to our volunteer fire department for service.

Make sure you account for every cost that affects your specific home.

 

Do you want a big house/yard? You’ve got to clean that whole thing.

7b8b597286cc433ae5819ff9a3d9b19dFloors, ceilings, light fixtures, kitchen (inside those appliances too), garage, bathrooms,
bedrooms, gutters, broken limbs, landscaping….EVERYTHING.

If you own it, you’ve got to keep it in good repair.

Buy the best house for you. Avoid buying the biggest possible house you can, just because you can afford it. You’ll thank me later.

 

Utilities are more expensive.

If you’re used to apartment, condo, or townhouse living and you’re moving to a free-standing house, you’re going to be in for utility bill shock. Those surrounding units do secret wonders to insulate your place and keep the utility costs in check.

Most apartments will pay for water, sewer, or cable. When you own a house…you’re on the hook for it all. Also, keep in mind that certain areas of town are covered by different utility companies and may charge wildly different rates for the same amount of usage.

Take a minute and call the utility company that service any house you are thinking about buying. Have them give you the highest, lowest, and average utility bill over the last 12 months for the place. Although your usage may vary from the current owner, this will help you keep things in perspective and plan.

 

Mortgage Interest & PMI is soul sucking.

If you borrow money, you’ve got to pay interest on it. If you put less than 20% of the home’s purchase price down, you have to pay PMI (Private Mortgage Insurance).

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This is why I plan to pay off my house in 6 years. Here’s how much I threw away on interest & PMI for 2016 alone. = $6,530.48
PMI protects the lender in case you default on your loan. It doesn’t protect you in anyway, reap any rewards, or have any benefits. So, in other words, you’re throwing your money away.

Likewise, getting the lowest interest rate possible on your mortgage is crucial. The difference you pay between 3.5% and 4.5% over the life of your mortgage can easily be $10,000+.  If you need a crash course on interest rates, click HERE.

With mortgages, you pay the bulk of your interest in the beginning, so this could mean paying many thousands of dollars towards your mortgage but only reducing the principle by a few hundred dollars per year. Among other reasons (transnational costs, moving expenses, etc) this fact is a leading reason why buying a house needs to be a permanent decision. You need to buy a house that you’re prepared to live in for more than a couple of years, otherwise you will find yourself under deep financial water when you want to sell.

 

Lawncare isn’t cheap.

74bce1d6ad068f12a2a846a61a643731Hiring somebody to mow your lawn could cost you $30 per mow. If you need to mow weekly and have 6 months of warm-months, that’s over $700 for just the grass!

The bushes need to be pruned. The trees need to be trimmed. The weeds need to be pulled. The flowers need to be fertilized. That costs $$$.

If you do it yourself, you can cut this cost down tenfold, but it’s in exchange for your time. Plus you have to buy all the equipment.

Push lawnmowers start around $70. Self-propelled ones begin closer to $200. Do you want a riding one? $1,000 without even blinking. Then you’ll need gas, oil, and blade sharpening. Chainsaw, hedge clippers, and shovels go a long way, too.

Another good reason you should be friends with your neighbor. If you need to borrow something, their front door is a billion times closer than the hardware store.

 

 


Here’s some of my tips.

GET QUALIFIED FOR A MORTGAGE BEFORE YOU SHOP.

This is my biggest tip of all. Before you watch HGTV and start going into open houses, go see a couple of mortgage officers and see what you can qualify for. This way, if you stumble across the “perfect” house, you can make an educated and informed decision on how it will affect you financially. You will be able to make an offer on the spot, and you won’t have to worry about pulling a dozen strings to make this house fit into your budget.

Plus, most realtors won’t show you houses that they don’t know you can afford, and most sellers will not accept your offer without written proof that you can afford their house.

However, getting qualified for a mortgage isn’t as hard as I thought. I reached out to a mortgage officer to see what we had to do to get ready for a mortgage later in life, and found out I could already afford a house!

One final tip on this topic. Don’t be tempted to spend every penny of your preapproval. The less you spend, the less you owe, and the more you save.

Get a realtor.

If you’re buying a house, REALTOR SERVICES ARE FREE.

The name that’s on the in the yard and the person running the open house are there to represent the sellers of the house. This is the most expensive purchase we make in our lives, so you need somebody in your corner to represent you. Why? The seller’s realtor is trying to get their clients the highest price possible. There’s no way that they can get the seller the highest price possible, but also fight to get you the lowest price possible on the same house. When one person represents the seller and the buyer, this is called “dual agency”, and many states/firms outlaw it altogether. Tennessee (where Man Vs Cash lives) is not one of those states.

Seriously though. Realtors see it all. They secure the best prices every day, and they know the secrets of each street. They are licensed, take classes every year, and stay up on market trends. You may buy 1 or 2 houses in your lifetime. A realtor has helped somebody like you buy hundreds of houses.

Interview a few realtors, find one you like, and stay loyal to them. They’ll save you thousands. And yes, if you’re buying a house… YOUR OWN REALTOR IS FREE TO YOU.

If you want insider industry tips from a realtor, CLICK HERE.

 

Get a home inspection.

Do you know how to identify a weak foundation, leak in the attic, faulty wiring, presence of mold, or other major issues? Home inspectors do.

They see these problems every single day on a wide range of houses (big, small, old, new). Home inspection prices vary on the size of the house, but begin around $250. Spend $250 now and avoid losing $200,000 later. It’s just that simple.

Personally, even if I was buying a brand new house, I would still get a home inspection. They’re built by humans, often as fast as possible. Mistakes can be made. Don’t let “new” trick you into a false sense of security.

 

Buy the right neighborhood.

3773893067_9fe08349f5_zYou can change the ugly carpets and paint those ugly walls.

You can’t change the location of your house…both in town, and in your specific neighborhood.

Pick the right location, then make sure the house fits your needs.

If something is out of date or just not your style, take a second look and figure out how easy or difficult is it to change. As an added bonus, buying houses that need updates can get you into more desirable neighborhoods for even less money. Plus, doing the updates yourself will always cost less than if you bought a move-in ready place, and you get the joy of making the house your own.

 

Think of resale.

Are you in a good school district? Is there an eyesore near your property that can never be changed? Is your yard undesirable? Is the floor-plan weird?

Maybe you are buying your “forever” house, but you always need to plan for unforeseen events…such as selling the house later in order to accept a new opportunity in life.

If you noticed it when you were looking to buy… somebody will notice it when you’re ready to sell. Something that you’ve grown to tolerate may turn off hundreds of buyers. Likewise, the ones who make it inside will be more likely to cut down your price due to the issue.

 

Good luck!


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