Monday, March 17, 2014
Buying your own home is one of the biggest steps you could take towards financial stability. Being a homeowner has its perks, such as having more privacy and the freedom to make design and renovation decisions. However, these perks also come with several responsibilities and obligations, particularly when it comes to expenses. Most first-time homeowners are transitioning from renting a house or apartment - soon they'll discover that the costs of renting and owning a home are different. Here are the financial obligations you may encounter as you transition to becoming a property owner.
Property price and closing costs
First and foremost, buying a home usually requires a significant initial deposit on the property price. Make sure this purchase won’t break your bank. Aside from the property price, there may also be closing costs to pay. Typically, common practice in the Philippines takes care of the notary fee, local transfer tax and deed of sale charges. However, these expenses may be appointed to the seller, depending on your negotiations.
Mortgage costs and interests
When buying a home, you will have to pay mortgage costs every month, the amount and duration of which depends on your loan terms and conditions. You will also need to pay mortgage interests, which in turn depends on the duration wherein you amortize your mortgage over. Consider these monthly costs before you commit to buying a home. Even if your expected income for the next few years indicates that you can afford the property, it is still best that you have an emergency fund for unforeseen circumstances.
Maintenance and repairs
As a renter, the landlord usually takes care of the maintenance and repairs of the house or apartment. However, as a homeowner, these are costs you need to consider. Don’t avoid or delay these costs, as routine maintenance and repairs will keep your house safe and livable. If you disregard things that need repairing, you run the risk of aggravating the problem and paying more later on. Maintenance may cover garden care, termite treatment, carpet cleaning and so on.
As a homeowner, you also need to pay your property taxes. The amount varies greatly, depending on your home’s location and current value. These taxes are typically paid to the local government. The fee may also change over time.
Homeowners association dues
Depending on where you live, you may also have homeowners association (HOA) dues as well. Condominium buildings and subdivisions with common areas and shared amenities typically have a homeowners association and coordinating monthly fees that depends on your lot size or unit area.