Comments on: 5 Big Questions For New Home Buyers #2: What Does It Really Cost?

By: David Hunter

David Hunter — Tue, 05 Jun 2007 19:30:26 +0000

A good article as usual Trent!

However in regards to home maintenance I would try and be a bit more precise, the price of the home is little guide, because you pay both for the land and the house, and often the difference in values between places is more due to the value of the land than any difference in between houses. I’d find some other measure and try and figure it out on the specifics of the house itself.

Cheers
David

By: Giorgio Campo

Giorgio Campo — Wed, 28 Mar 2007 01:29:19 +0000

Great article- just be careful; home ownership is a very serious endeavor- take a peek at what is going on in Chicago..

Read:

http://chicagoviprealtors.typepad.com/chicago_metro_vip_realtor/2007/03/and_in_this_cor.html

By: Ace

Ace — Wed, 17 Jan 2007 11:45:30 +0000

I agree with Ralthor’s adjustments. The tax savings are grossly overvalued in the original article, both for the reasons Ralthor mentions, but also because the only savings come from the tax on the difference between your itemized deductions (including mortgage interest and taxes) and whatever your standard deduction might have been.

Of course, in the long run, home ownership is almost always a good deal because you end up with a real asset that generally appreciates in value and is largely exempt from capital gains tax.

By: Ralthor

Ralthor — Wed, 17 Jan 2007 02:58:14 +0000

I am also trying to decide how long I am going to save money until I buy a house, so I love these articles.

I have a question about your tax break calculation. Only the interest is tax deductible and the first year you are paying in the 7K range of taxes (I think with your example). At best you are getting a $200 break a year, probably closer to $175. This tax savings will also decrease each year.

I think you were just making it easier to calculate, but to be safe I would round by over estimating expense and under estimating savings.

Just as a side note (and maybe you will hit this in a future article), but if you are going from an apartment to a house you have to take into account, water, sewage & garbage (usually free at apartments), increased electric/gas costs (for heating and powering a larger area), lawn mower, ladder, hoses, (more furniture?) and all the other stuff you don’t need at an apartment.

By: Kevin

Kevin — Tue, 16 Jan 2007 21:52:26 +0000

Keep articles like this coming. I am eating this stuff up as we get ready to buy a house (hopefully) a year from now.

@Keter – Do you have a dome home?

By: HC

HC — Tue, 16 Jan 2007 18:38:40 +0000

It’s also worth noting that in places that AREN’T rural Iowa, many homeowners will have to pay condo association or homeowner’s association fees. (These often cover some portion of utilities or maintenance. However, most people pay out more than they get back, at least directly.)

In my area, even 1-bedroom condos have fees of between $150 and $400 a month.

By: Keter

Keter — Tue, 16 Jan 2007 17:27:52 +0000

I ran into a nasty surprise after purchasing my first home. I did exactly the kind of calculation described, and came up with a monthly cost of slightly less than described in the article. My home purchase price was somewhat lower, and my property taxes and insurance somewhat higher. I was comfortable with that amount as it was only $200 more per month than I was paying to rent an apartment.

Over the next 5 years, the insurance doubled from $800 to $1600, and the taxes nearly doubled from $2700 to $4600. Yes, I protested, but to no avail. It’s going to take a class action lawsuit to get this taxing district to back down. And I can’t find an insurance carrier who will give me a break due to the unique construction of my home — they insist on using a standard table that doesn’t apply to my property.

I’m just sick about this — I’m paying the equivalent of more than 5 mortgage payments per year for stuff I don’t even use. The majority of the taxes are for the schools, and my children are long since grown; my home is made of concrete and steel, I will likely never need to claim on insurance for anything because it is almost completely invulnerable — I would drop insurance entirely and put the money into an emergency fund instead except my mortgage requires it.

So it just goes to show that no matter how carefully one researches and plans, things can change dramatically in ways that cannot be anticipated, and you’re left paying for things that make no sense whatsoever.