I want a house. I really want a house. I’m itching to get out there and get some land to call my own. The tricky part is ponying up the money to do so. I’m getting closer and closer to reaching my ‘I-need-this-much-money-before-I-even-think-about-looking-for-a-house’ goal, so the cost of housing has been on my mind lately. Ok, I’ll admit it, it’s a little more than just on my mind, I’ve been obsessing about it. Before I go and take such a huge financial plunge, I want to make sure I’m absolutely ready and that I have prepared myself as best as I can. Krystal over at Give Me Back My Five Bucks just bought her own place and kindly shared the money-details, which has inspired me to do this. Atta be Krystal!
To better prepare myself, I’ve sharpened the pencil and pulled out the calculator to mock up a monthly budget that includes mortgage payments and other housing related costs. I figure before I even step into a bank to ask for a big ole whack of cash, I’d better make sure all the numbers work out salary wise. I feel pretty confident that the bank will give me money, but need to know that I can live within my means with the added costs of a home, first. I did up budgets for a wide range of mortgage payments based on home prices ranging from $179,000 to $250,000, which generally reflects the costs of homes in this area that would suit my needs. I’ve also tried to include all those extra little costs that come with owning a home, from taxes, water fees (but no sewer, because where I would like to buy isn’t serviced by sanitary sewers), insurance and maintenance.
Here’s what the numbers that I came up with, and any comments on these numbers would be greatly appreciated as some of them are best guesses.
Electricity and Heating – these are best guesses, based on single occupancy. I’m a cool-blooded person and grew up in a drafty farm house, so I’m used to room temperature around 17 C. This cost is also dependent on the type of heat in the house. Ideally for me, it would have a wood stove and not electrical heating. Another option is propane heating. Unfortunately, my area is not serviced with natural gas, so that’s not even an option.
Property/Content Insurance – best guess of $1600/year.
Transportation: I am going to have my car paid off before I buy a home. I do not want that debt hanging over me. I increased the gas portion of the budget because of aneurism-inducing gas prices, not because I’ll be driving any further than I am currently. The area I’m looking at is two miles from where I live right now.
Groceries: Single gal remember, and I don’t often buy junk or processed food. Also, any place I buy WILL have a veggie patch and potato barrels.
Dental: based on a cleaning/check-up every year (not covered by my work benefits)
Medical Expenses: This is my glasses fund (1 pair every two years) – I consider them a medical expense because without them, I would likely put myself and many others in the hospital.
Internet: is a living expense. Must have internet.
Everything under luxury are items I figure I could live without if it came down to it. You’ll see I left the row for furnishings blank. I debated about whether to include a monthly amount for new furnishings or not, but decided that furniture is more likely a big ticket item that I would save for over the period of a couple years and isn’t really necessary to include in a monthly budget at this point in time. I left newspapers and books blank to because I’m hoping I’ll receive a newspaper subscription as a birthday gift from the folks.
My house maintenance/repairs savings per month is based on 3% of the cost of the home. I may increase this a bit depending on the condition/age of the roof and septic system.
RRSP: $200 a month is on top of the 3% contribution that comes off my paycheck and is matched by my employer.
I’ve also included a guess of closing costs of around 2.5% – anyone with experience with closing costs think that’s reasonable?
Whew, so that’s what I’ve come up with. Please share with me what you think. Am I being reasonable or a little apple pie in the sky?