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Long-term cost matters as much as the purchase price
Wednesday, April 29, 2009 • Posted April 28, 2009 10:00 PM

Is it possible for a house to cost less and more than another house? It wouldn’t seem so, and yet the answer is yes. If you don’t pay attention to some key details, you might wind up in just such an unenviable position.

The long-term cost of any home depends on many factors. And while two homes may have identical purchase prices, the amount these homes cost their owners over time can vary by quite a bit.

Purchase price is just the beginning

For starters, the loan you choose can greatly affect the amount you pay for your home over the years. You’ll want to sit down with your Texas Realtor and a mortgage professional to discuss what loan fits your situation best. Just because the payments on one loan start out lower than another loan doesn’t mean it will always stay that way. Adjustable rate mortgages and exotic loans offer attractive beginning payments but can increase substantially in the future.

Property taxes also can make a significant difference in a home’s ongoing costs. Do a little research on property taxes to see what the existing owners pay and how your taxes might differ if you own the home. After all, you may not qualify for the same exemptions and the current owners may be benefiting from appraisal caps that will not be in place once you purchase the home. Taxes also vary from one area to the next—you may even find that homes relatively close to one another are subject to different taxing entities.

Homeowners insurance can vary from one property to the next, too. If you’re buying a home located in a flood plain, your lender will probably require you to also get flood insurance. There may be other factors that will affect your premium as well, such as the building materials used in the home and whether the property has an alarm system.

Homeowners association fees can produce quite a discrepancy in costs between two otherwise-similar homes. Some homeowners associations charge several hundred dollars a month. That cost may be worth it to you for the amenities provided by the homeowners association, but you’ll definitely want to factor this cost into your buying decision.

Repairs and remodeling add up quickly

How soon will the home you’re considering need a new roof? Is the AC on its last legs? Does the carpet in the bedrooms “absolutely have to go”? These types of repairs and remodeling projects can cost thousands of dollars. Make sure you consider these factors and investigate what they will cost should you decide to purchase the property. And while you’re at it, make sure to get a professional inspection on the house. An inspector can alert you to conditions that may require a significant amount of money to remedy.

Utility and upkeep costs vary

Electricity, water, and other utility costs keep going up. If you purchase a house with energy-efficient features, you can save a lot of money, month after month. You may be able to look at past bills from the utility or you can ask the current owners if they will provide copies of their past statements. Keep in mind that their usage may not be the same as yours. You should also try to determine a home’s maintenance costs, such as how expensive it will be to keep up the yard, if the house will require repainting the exterior every so often, and similar tasks.

How much will the property sell for in the future

There’s one more item that can affect the cost of a home more than all the others combined: resale value. You may not be able to pinpoint all the variables that go into the resale value of a home before you even purchase it, but it’s certainly something to consider. A smaller home in a neighborhood that’s on the upswing certainly has more resale potential than the best home in a declining neighborhood.

Whatever you do, make sure you look beyond the purchase price when you compare one home to another. Your Texas Realtor can help you weigh all the factors to make sure you are getting a good deal for the long run.

For your real estate needs, please contact RE/MAX Genesis at 830-833-2000.

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