You probably are aware of the average selling price of an MLS listing in Ajax. But do you have any idea about the hidden costs of homeownership - all the lesser-known expenses apart from the mortgage payment? Probably not!
If so, you must account for these hidden expenses while calculating your home-buying budget. By accounting for all the homeownership costs, you can get a clearer picture of what your monthly housing costs will be. This will help you stay within your budget and avoid overextending financially,
Hidden Expenses in Homeownership
Closing Costs
Closing costs are fees paid on top of the purchase price of the MLS listing in Ajax when the deal is finalized. They typically range from 2 to 5% of the loan amount so on a $900,000 home that could be $18,000 to $45,000 extra.
So, while shopping around for properties, don’t just focus on the listing price. Add around 2 to 5% to that number to account for closing costs.
Odd Days Interest
Odd-days interest refers to the interest that accrues on a mortgage loan for the period between the closing date (when you buy the house) and your first regular monthly payment. Those “odd” days create a small pocket of interest that a homebuyer needs to pay.
Some lenders might not explicitly mention odd-day interest during the loan pre-approval or application process for the Ajax MLS listing. Because of this, homebuyers usually do not budget for this additional expense.
Property Taxes
Property taxes are annual fees levied by the municipality to raise revenue for running the town. These taxes are used to fund essential services in Ajax you rely on as a resident such as -
Police and fire departments
Public schools
Parks and recreation
Road maintenance
Property tax rates in Ontario differ depending on the location. Some areas have much higher property tax rates than others. Hence, before buying an MLS listing in Ajax, research the typical property tax and factor that into your budget.
Homeowners Insurance
Homeowners insurance is a type of insurance that protects your home and your belongings in case of unexpected events. Homeowner’s insurance isn’t mandatory but some lenders typically require it if you have a mortgage. And even if the lender doesn’t require homeowners insurance, it’s a wise decision for a homeowner to have it.
Imagine a fire, theft, or a major storm damaging your new home. Homeowners insurance can help cover the cost of repairs or rebuilding the MLS listing in Ajax, saving you from a huge financial burden.
HOA Fees
Homeowners Association fees or HOA fees are regular payments made by homeowners who live in a community managed by a Homeowners Association. So, if your new home in Ajax is part of a HOA, you need to brace up to pay these monthly HOA fees. You must ask about the presence of an HOA and potential fees upfront during the house-hunting process.
Maintenance and Repairs
You need to do some regular tasks to keep your new home in tip-top condition and prevent future problems. For instance - cleaning gutters, changing air filters, and checking for leaks. There will also be certain unscheduled fixes that will arise because of wear and tear, appliance breakdowns, or sudden failures.
For these home repair and maintenance tasks, you need to set aside 1 to 4% of the purchase price of the MLS listing in Ajax annually. You can also consider getting a home with a warranty that covers repairs or replacements of specific systems and appliances during the warranty period.
Utilities
Utilities are the basic services you need to keep the house running comfortably and functionally. These typically include electricity, water, gas, trash collection, and Internet.
Since we’re assuming you’re moving into a larger home or a new area, your utility consumption and bills will also be different. So, set aside a specific amount in your monthly budget for utility costs.
Tips to Manage Your Budget as a New Homeowner
Create a Realistic Budget
Having a realistic budget for your new homeownership journey is a must. Start by listing all your income sources and expenses such as mortgage payments, property taxes, utilities, homeowners insurance, and HOA fees. Don’t forget to factor recurring bills, groceries, and other day-to-day expenses in the new budget for the MLS listing in Ajax.
Factor in Maintenance Expenses
Set aside funds for repairs and unexpected issues in your new home in Ajax. A good rule of thumb is to save around 1 to 4% of your home’s value annually for maintenance. This will help you manage the home repair and maintenance costs without stress.
Embrace the 50/30/20 Rule
This popular budgeting tactic can help you manage your finances seamlessly as a new homeowner. According to this budgeting rule, you must set aside 50% of your income for essentials such as the mortgage of the MLS listing in Ajax, groceries, and utilities.
Next, use 30% for wants such as entertainment and dining out and 20% for savings and debt repayment. This balance ensures you’re covering all your bases as a homeowner without overspending.
Pace Yourself on Furnishing
Furnishing the new Ajax MLS listing can be expensive for your wallet. This is why avoid the temptation to buy everything for your new home at once. Try to use what you have for as long as you can, shop for deals, and also consider buying pre-owned furniture.
Beware of Lifestyle Inflation
Being a new homeowner might tempt you to increase your spending in other areas. So, stay mindful of your budget and avoid lifestyle creep.
Renegotiate and Reassess
Regularly review your recurring expenses in your new home such as cable and phone bills. See if you can renegotiate better rates or switch to more affordable plans.
Keep an Emergency Fund
Lastly, having a safety net for unexpected repairs or emergencies is important. You must try to save at least 3 to 6 months’ worth of living expenses in a separate account. This fund will provide you with financial stability if any unforeseen circumstances come up in your homeownership journey.
Understand the Real Price Tag of Owning a Home
When people think about the costs of owning an MLS listing in Ajax, they usually focus on the down payment and the monthly mortgage payments. However, there are many additional expenses that they often do not pay much heed to. But these extra costs of homeownership can add up quickly, making homeownership more expensive than it seems at first glance.
Hence, it’s important to consider all these hidden costs before investing in a home and becoming a homeowner. Understanding the full picture - the true cost of homeownership can help you be better prepared and avoid any unpleasant surprises down the road.