As your client’s guide to the process leading to homeownership, it’s your responsibility to make sure they know what they’re getting into from a financial perspective. First-time buyers could not know all the expenses that go along with owning a property. Obvious ones like taxes and insurance can skyrocket year over year. Here are four expenses to go over with them before they start making bids so they are aware of what may come.
Escalating insurance
Everyone knows homeowners insurance is a must, but these days where the house is located should be taken into account, with the LA fires proving the point. Insurance companies can and will raise rates dramatically, so new homeowners should check whether they may be in potential flood, fire or other risky locations.
Maintenance costs
Once a buyer takes ownership, it is not the time to find out potential costs for roof repairs, HVAC system upkeep, plumbing repairs, electrical system maintenance, appliance replacements, landscaping and more. It’s best to follow the ‘1% rule’ where owners budget around 1% of their home’s value annually for maintenance needs.
Property taxes
Another cost where what it is now may not be even close to what it is as the years go by. Most municipalities raise taxes each year. It’s worthwhile to find out how much the town a buyer moves into has raised taxes each year. Often the more valuable homes get bigger percentage increases than ones worth much less.
Assessments for coops and condos
For those buying condos or co-ops, monthly maintenance isn’t all there may be to pay each month in addition to the mortgage. Homeowner associations can levy assessments for any number of building needs, and they can be quite hefty. Buyers should see what capital improvements may be necessary before committing.
