Beyond Mortgage Costs

Once you have a mortgage payment you can handle, you’re not done yet. To make certain you can really afford your dream house, you have to consider a number of other expenses, including:

• Homeowner's insurance—This protects property loss caused by fire, other natural causes, vandalism, etc., depending upon the terms of the policy. You must have this type of insurance to close on a loan. You may have to get separate policies to cover flood, wind or earthquake damage.
   
• Property tax—You pay this annually based on the value of your property. Property tax laws and percentages vary by state and are administered by your county. On the plus side, property taxes may be income tax-deductible.
   
• Ongoing maintenance and repair—From roofs to water heaters to windows, your home will need maintenance at some time or other. A generally accepted rule of thumb is to set aside 1 percent of the purchase price each year in a maintenance fund. It might be wise to add this into your savings calculations so you won’t be caught off guard.
   
• Homeowners association (HOA) fees—Depending on the type of property you buy (a condominium, for instance) you might be charged fees for landscape and building maintenance or recreational facilities. These fees are above and beyond your mortgage and individual property costs.