Here’s a seemingly simple question: Will a $175,000 house or a $200,000 house cost you more? Before you question my grasp of numbers, hear me out.
While your mortgage payments are going to be higher on the $200,000 property, that’s not the whole story. Does your current household budget include anything else besides your mortgage or rent? Many expenses, whether regular bills or one-time costs, contribute to the long-term cost of living in a home.
Before you do anything… What do you need to buy soon after closing? Maybe the more expensive home includes a washer, dryer and refrigerator, while the cheaper one doesn’t. Purchase, delivery and installation of major appliances can add up quickly. How about window treatments or landscaping? Maybe one of the homes will need a new fence in two years, whereas the other home has a brand new one. None of these costs alone will bust your budget, but a few of them can turn into a significant expense.
Get in the car: Compare the homes’ locations in relation to that of your work. If one house is 10 miles farther from your office and you commute fives days a week, that’s an extra 100 miles – and about four more gallons of gas – per week. With gas hovering at $4 a gallon, you’ll spend about $64 more per month to commute from the farther house. That’s not to mention the cost of your time spent in the car. And don’t forget to factor in your trips to the grocery store, school, daycare and other places you regularly visit. How does the location of the homes affect your gasoline consumption when you go back and forth to these destinations?
Location, location, location: Does one house lie in an area, like a flood plain, that has different insurance requirements? That extra $40 a month adds up over the time you spend in the house. How about homeowners-association dues?
An oldie but a goodie: Compare the ages of the homes. Older homes typically need more work than newer ones – plumbing, electrical and HVAC components wear out over time and need to be replaced or repaired. Everything from the foundation to the roof can require attention. Resolving a major foundation issue can easily eat into that initial $25,000 price difference. Fixing a big plumbing problem can be costly, too.
That’s not to say that a newer home will not have problems or require attention. All homes require maintenance and repair. Upkeep on homes is a major factor in resale value. Little problems don’t just go away, either – they can turn into big problems if they’re not dealt with promptly.
Practical advice: This article is not intended to scare you or dissuade you from buying a house – far from it. Take it as advice. After you figure out your price range, think about additional expenses not typically associated with monthly housing costs. If you’re trying to decide between two houses, look beyond any price difference. Your Texas Realtor can help you sort through these expenditures; this is the key to determining your true buying power.
For your real estate needs, contact RE/MAX Genesis at 830-833-2000.