The major dream for many people is to purchase a home of their own. There are some things to consider before jumping into home ownership. Besides the mortgage payment, you will also be responsible for interest charges, home owners insurance, real estate taxes, utilities, repairs and maintenance.
Some experts suggest to not take on any new debt for car loans, credit card or other debt for at least a year after closing on your new home. It may take that long to get used to the mortgage payments and realize what it is really costing you to own a home. It is also advised not to take on a lot of debt between the time of signing the purchase agreement and the closing of the loan. It may be tempting to run out and buy new furniture and other items so you have them when you get into your new home, but by taking on considerable debt all of a sudden can wreak havoc at the time of closing your loan.
Mortgage payments
Your monthly mortgage payments will consist of the principal, interest charges, homeowners insurance and real estate taxes. You need to take this into consideration when determining how large of a mortgage to obtain. Many people think if they can afford a certain amount in rent, that they can also afford a mortgage payment of same amount.
Utilities
While you were renting some or all of your utilities may have been included in your rent. Many times the tenant may be responsible for the electric bill, but the landlord may have paid for water, garbage and other fees that you will now be responsible as a homeowner.
Repairs and maintenance
Now that you are a homeowner, instead of being able to call a landlord to fix items you will either need to fix them or hire someone to fix them. It is wise to have money saved for items that will need to be fixed or to replace appliances and other things that may come up.
Furniture
It may be tempting to go out and buy all new furniture when you purchase a new home. It may be wise to try to get by with what you have to start with and live in your home for a while to see what you really need. After living in your home, you may get other ideas of how your want to decorate.
Home ownership is a dream for many but can become a nightmare if you are not financially prepared before taking the leap.