Property taxes can vary drastically depending on your area; do your due diligence and be aware of what the local government will be taxing you and budget for it. Here in LA County, property value taxes are at about 1.2%. A million-dollar property would see taxes starting around $12,000. There are websites dedicated to seeing what an estimate of the property tax would look like.
Include any extra fees that you’re aware of, including HOA fees and space fees if your property is a mobile home. There are fees associated with the loan itself. For example, the lender could offer you a “buy-down” to buy down the interest rate from 3% to 2.75%. If it’s a good deal, take advantage of that buy down.
Insurance is another cost that goes into the monthly payments. Let say you’re looking at a unique property and it has multiple structures on that property; the price of the insurance is likely to be higher. It wouldn’t hurt to get quotes from three different insurance companies to determine what the insurance will cost.
Maintenance fees are hard to determine without a formal inspection report, and homeowners sometimes forget about this when looking at homes. When you’re buying a property with what they call deferred maintenance, that’s a nice way of saying it needs work. What is that price if the property needs new flooring, landscaping, if the kitchens outdated, or if the electrical is outdated? Ask to know how many years the roof, the electrical, the plumbing will last until it needs maintenance.
Consider hiring an independent inspection report, it is an out-of-pocket cost, but a small investment could help prevent future losses. Try even negotiating the price of a 3rd party inspection with the previous homeowners and see if they can cover that cost for you.
While the PITI (principal, interest, taxes, and insurance) is essential to consider, the maintenance and renovation costs can impact your budget. That way, you’re not stressing about it because you don’t have the funds to fix it.
Contributor: @MichaelPomes
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