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Look beyond sales price Published January 23, 2010 You’ve calculated your finances and determined how much house you can afford. So, here’s a hypothetical: which costs more? A $150,000 house or a $165,000 house?Assuming similar financing arrangements, monthly payments will be higher on the higher-priced property. But it’s just as important to think long term as month-to-month — in other words, not only how much the house will have cost after one year, but after 10. You may find that over time that $15,000 difference between properties evaporates or may double. Appliances can be costly. Does one home have a washer-dryer or refrigerator that conveys at the sale? Purchase, delivery and installation of major appliances can add up quickly. What else about each house needs immediate attention and what’s the cost? Is one of the homes in a location that requires using one extra gallon of gas per day on your way to work? If you commute, that’s about 20 gallons each month just to get to work and back. At $2.50 per gallon, that could be close to $6,000 over 10 years — almost half the original price difference. Does one house lie in an area, like a flood plain, that has different insurance requirements? Forty bucks a month may not seem like much, but over 10 years that totals $4,800. Older homes typically need more work than newer. Plumbing, electrical and HVAC components wear out and need to be repaired or replaced. Resolving a major foundation issue can wipe out that initial $15,000 price difference. Plumbing repairs can be costly, too. This is not intended to scare or dissuade you from buying a house — far from it. Take this as a piece of practical advice. After you calculate your price range, think about additional expenses not typically associated with monthly housing costs. There’s more to affordability than mortgage payment and utility bills. There are factors you may not consider and unanticipated expenses that will almost certainly arise. Your Realtor can help. Nancy Furst, CIPS, TRC, GREEN, GRI, is owner of The Furst Group and serves as southeast district director for the Houston Association of REALTORS® (HAR). She is actively involved in HAR’s governmental affairs efforts and has lived in the southeast district since 1997. Please visit TexasRealEstate.com or HAR.com for more. - Written By Nancy Furst |
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