Some people look at a home as an investment. Personally, I tend to look at it more like a vehicle. It’s a means to an end that will cost money and that I won’t likely get all my money out of when I sell.
However, depending upon the situation, a home can be even more costly than expected, and it can fleece its owners of their hard-earned cash. This was what happened to us with our first home purchase.
The “higher price range” argument
When searching for a home, it can sometimes seem like the price range you’ve chosen just isn’t cutting it for the things you want. Depending upon your real estate agent, this might be the time you hear the familiar, “Well, you might need to consider raising your price range,” from him or her.
This was our first home-buying mistake. Rather than stick to our guns and continue searching, or cut our “wish list” down by an item or two, we upped our price range, making our agent’s life easier and fleecing ourselves of and extra $50,000 in the process. The first home we saw in this price range of course blew the previous homes we’d seen in the lower price range out of the water, and we jumped to put in an offer before clearly considering other options.
Unstable property taxes
A property tax rate can be one of those variables that is hard to control. A change in property value, tax rate, homeowner exemption amount, or even the way the tax rate is calculated can lead to higher property taxes.
In our case, and extended exemption was eliminated and the way our tax rate was calculated was adjusted as well. Therefore, a year after buying our home, our property taxes went up by $1,000 annually, and then another $400 the following year, before leveling off temporarily.
Understanding as much as possible about property taxes and tax rates by visiting municipal websites like that of the county assessor can help keep such adjustments from catching you by surprise like they did us. It may also help you have your property value reassessed should its value drop, potentially lowering your property tax bill as well.
Those individual repairs start snowballing
As homeowners, we expected there to be repair and maintenance costs. As with any property, eventually there will be some repairs, maintenance or updates that are necessary. However, depending upon the age and location of the property, as well as the ability of the homeowner to conduct such repairs themselves, these costs can begin to snowball.
The first year in our home, such expenses were minimal and revolved largely around minor adjustments we wanted to make to the home in an effort to add our personal touch. $20 for paint, $40 for new blinds in the bedroom, and similar minor fees added up, but weren’t excessive. Plus, making such changes was fun and exciting. However, then there was the $1,300 to re-shingle the garage roof, $800 to replace the flood control pump, $1,000 in electrical updates, $350 for a wall repair, $450 for a porch awning replacement, $275 for tuckpoint repairs, a $200 garage door repair, and similar costs that over the next two years that really put a dent in our finances.
So when it comes to home ownership, much like being a parent, while the experience can be rewarding, a home can also be quite expensive, and sometimes it’s those unexpected costs that hurt the most.
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The author is not a licensed financial or real estate professional. This article is for informational purposes only and does not constitute advice of any kind. Any action taken by the reader due to the information provided in this article is solely at the reader’s discretion.