Posted: May 4, 2012 5:04 PM
Updated: May 4, 2012 6:32 PM
TUCSON - If you own a home, then you know the real cost of having a house goes way beyond the mortgage payment. It's the unexpected expenses that can really strangle you.
And that's critical knowledge for first-time homebuyers now being lured into the market by low home prices and rock-bottom interest rates.
Eric and Tavie Playford are packing-up their apartment as they prepare to move into the first home they'll ever own.
"A lot of angst. It was something we wanted to do for a long time," says Eric.
This young couple with three kids found their dream home after months of searching. And they say they're going into home ownership with eyes wide open, knowing they're responsible now for higher expenses.
"Once we get through the costs of actually moving in, we're just going to take a little money from each paycheck and store it away in a saving account, just in case."
Just in case the air conditioner goes out or the roof starts to leak.
But here's the good news for this young family. Their $630 monthly rent will only increase to $765 a month for their mortgage.
They expect their electric bill to jump from $140 per month to about $ 200 per month.
Home Owners Association fees are $15 dollars a month. And there will be an $80 bill each month for water and trash.
Of course they will be paying for property tax and additional insurance.
This is all well within their budget with room to save for those repairs and upgrades.
Michael Corbett is author of "Before you Buy". Trulia.com, an online real estate listing company, provided our interview with Corbett.
"You never want to overextend yourself when it comes to home buying," he explains. "We've seen what has happened in the past ten years."
Corbett advises that you buy a less pricey home and start a reserve fund the way Eric and Tavie have done.
"Really the key to buying a home in today's market is knowing what the costs really are," says Corbett. "It's one of the biggest buyer blunders."
Michael Corbett says you should buy a home that's at least 20% less than the priciest you can afford. This will leave room for those other expenses.
And if at all possible, put at least 20% down. That'll save you big on paying mortgage insurance.
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