One of the first and most important decisions of the home buying process is deciding how much you are willing to spend. You need to have a budget in order to make sure you can get approved for financing and so you can know what areas have homes in your price range. There are a number of things that can affect your budget that some people don't realize. When you start looking at homes for sale, these are some factors to consider for your budget.
1. Home insurance
There are several factors that influence the cost of home insurance, and you won't know all of them until you put an offer on your home and get quotes for that specific property. However, some things are guaranteed to make rates go up or down. When looking for a home, you can see features of the house that will be reflected in the cost of insurance. These include:
- The size of the house. Larger houses cost more to replace, so they cost more to insure. Even if you have a few hundred square feet less, you will pay less in insurance.
- High-end features and finishes. Hardwood costs more than carpet. Custom cabinets are more expensive than factory-built ones. The interior quality of the finishes will mean higher insurance cost.
- Location. Insurance companies look at the crime in the area, the probability of natural disasters, and the history of the home itself.
- The age of the house. Older homes are at higher risk for fire and other interior structural failures.
2. Property Taxes
Some cities and towns can cover several counties, and each county will have different tax rates. Suburbs might be different than the city. Look at county records to see tax rates so you can estimate or view the taxes for the houses you look at.
3. Home Owner's Association
Many homes have high HOA costs on a monthly basis. These can be a few dollars or hundreds of dollars. Always check before you make an offer on a house. You might be able to afford the mortgage, but with a $200 monthly HOA bill, that house might now be out of your budget.
4. Utilities and Fees
Properties always have utilities as part of the expense. Ask the sellers what they pay for heating and cooling. Look for cost-saving features such as new windows and attic insulation. Finally, look into fees that people might have to pay on a yearly basis, such as a stormwater charge or even city snow removal.