|No surprises: Prepare upfront for hidden home ownership costs and risks|
Whether you have chosen to buy an existing home or build from the ground up, there are certain costs you can count on, above and beyond your monthly payments. It’s important to be aware of these so that you can come up with a realistic budget — one that provides for the hidden costs of home ownership that can catch you off-guard.
Once you’ve found your dream home, there will be certain expenses related to closing the deal. These may include bank fees, legal fees, a quantity surveyor’s report and most importantly the insurance to protect the biggest investment you might ever make.
Include the costs of updates and style changes
Many people make their new home their own by painting, buying new furniture or renovating. While these upgrades can make you feel right at home, the cost of such extras can quickly add to the purchase price while hopefully increasing your property’s value.
Of course there’s the cost of the actual move. This can vary widely depending on whether you do it yourself or hire professionals.
Even with professional movers, the cost depends on who you hire and how much help you want. They can simply move your belongings from the old location to the new or do everything from supplying boxes, tape and packing materials to packing and unpacking for you.
Factor in your fixed expenses
After the move, the fixed expenses of home ownership are often referred to as PII, for Principal, Interest and Insurance. Generally, mortgage payments make up the biggest expense of your home’s value. When a mortgage is paid off, you no longer carry that expense monthly; however, you would be very wise to continue with insuring the value of your home and its contents to protect your family from any one of many unforeseen events that could erode the value of your home or see the home lost entirely.
The TCI has experience with hurricanes, and while they are extremely destructive, they are not the only risk to your investment. You always have to be aware of the dangers of theft and fire to your property. Most insurance policies will cover fire and theft-related damage to your property, but be aware certain things may not be covered, such as flood protection.
So if there are risks where you live, look into obtaining the appropriate type of coverage.
Your utilities are another regular home ownership expense you can count on. Electricity, gas, phone, cable, Internet and other utility bills will vary according to what you have in your home and how much you use it.
Beyond the inevitable expenses, there are some you can’t predict but should nonetheless prepare for. They usually involve repairs and maintenance. While upgrades and renovations may be optional, others, like repairs, may not be able to wait, depending on the nature of the problem. When it comes to hurricanes, the best protection for your home besides the physical protection such as shutters and sandbags is insurance.
Expect the unexpected
Many homeowners prepare for the unexpected by saving a small sum in a special account each month. Some experts recommend setting aside at least 1 percent of your home’s purchase price each year for repairs and maintenance. On top of this, it is extremely important to ensure that you take your insurance premium divided by 12 and ensure you are saving enough each month to cover the annual premium of your insurance.
Homeownership is a goal that many people strive for and enjoy over a lifetime. Understanding the expenses involved with owning a home and at the same time protecting the home you and your family cherish will provide the peace of mind every household benefits from. Stop by any branch of Scotiabank to pick you your personal copy of “Survive” Your Hurricane Handbook, which contains many helpful hints on how to protect your family and your home during the hurricane season.