Avoid Unexpected Expenses
About the only thing I knew as a first-time homebuyer was that I didn’t know anything. I had bought a condo from the builder, practically on a whim one weekend, and waited three painful years until I could move in. That gave me a lot of time to plan and research. I tried to plan for everything, including making a model of the floor plan and my furniture in Photoshop and attempting to fit everything in. (It worked!)
I knew that my maintenance fees wouldn’t stay low forever, but was shocked when within 18 months they jumped from an affordable $225 to $497 a month. Ouch.
When I sold the condo and moved to a house there were other costs to consider: rising property taxes, water and sewerage, and in Toronto, garbage collection fees.
According to mortgage specialists, hidden costs can impact even the best home-purchase plans. Obviously, there is the mortgage to budget for and it’s important to realize that interest rates are on the rise, along with the costs of natural gas and electricity (and everything else).
Don’t forget to include the cost of home owners insurance, which covers liability and the contents of your condo or house. Lenders usually require proof of insurance when it comes time to sign the mortgage.
But there are other types of insurance available, such as mortgage insurance that solely covers the amount of money owing on your mortgage. Unlike home insurance, the amount covered reduces as you pay down your mortgage.
What happens if you become seriously ill and can’t work? Of course, there’s insurance for that! It’s called critical illness insurance and can sometimes be costly. Have a qualified insurance advisor do a “needs-based analysis” to figure out what kind of insurance is best for you in the event of something unexpected happening.
It’s difficult to plan for everything, so expect that there’ll be some hidden and unexpected costs to purchasing real estate.
