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VIDEOHomeowner Overboard
By
Laurie Petersen Mar 06, 2009 8:15 am
Cost never ends once you own a house
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That would be me.
I’m writing this at the kitchen table in my 100-plus-year-old home sitting directly opposite the open oven and running dishwasher. These are the only sources of heat on a 26-degree morning. It’s almost Dickensian.
The utility guy is poking around in the boiler room attempting to fix the heating unit I’ve been Band-aiding and really should have replaced at least 5 years ago. His verdict: I need a tiny part called a pilot safety and a new therma-coupler block switch.
You can’t make this stuff up!
The unit is old and the manufacturer is out of business, so I need to find the part on the Internet. Once I get it, I’ll use my standard plumbing and heating guy to install it because the utility guy is not allowed to, seeing it is an “unauthorized” device. It'll work itself out in the end.
The moral of this story: The mortgage is often the least of your worries when taking on the responsibility of homeownership. It’s one reason I never took on a mortgage where the payment of principal and taxes came to more than 25% of my gross income. My father schooled me well.
It’s open season for prospective homeowners (like the newlywed first-time buying couple who live in my building). They’re getting call-backs from sellers accepting offers they made that were 20% below the asking price in a nearby suburb popular with people who plan to have children. Still, they’re holding out, anticipating prices will drop further and not wanting to take on the obligation while his company is laying people off.
Buying a house is more than a mortgage. There are property taxes. In my experience these always go up, never down. Homeowner’s insurance costs more than it does for a rental. Keep your premium costs down by making the deductible as high as you can stand to risk.
The biggest mistake you can make is to underestimate the amount it will cost to maintain your home. A good budgeting benchmark is 2% - 5% of your gross income. Some years it can go higher. If you've got an old house, expect to be on the high end.
Wait too long to make repairs (leaking pipes, rusty railings, etc.) and it can wind up costing more. When it comes to home maintenance, problems tend to escalate if not nipped in the bud.
My parents have a terrific system. They deal with one new big project that needs upgrading every year. Then every 5 years or so they spruce up the interior of their home to keep it looking fresh and new. This way, they get to mix the mundane upkeep items with things that have a direct impact on the quality of their lives.
Finally, remember this: The days of buying and flipping are over. Pick a house to live in because you want it, not with your eye on the next move.
With the market dead in my town, I’m thinking of trying a house swap. Anyone want to live four blocks from a little beach overlooking the New York Skyline? Any creative thinkers out there?
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Here's more on Buying Your First Home from my colleague Scott Reeves.
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