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5 Hidden Costs of New Homes All Buyers Should Know

5 Hidden Costs of New Homes All Buyers Should Know

Buying a home is a daunting prospect for many, but it is a well-known truism that it is better to buy a home than rent one. When you rent a place, you are just throwing money away while buying a home is an investment that will hopefully pay off.

But that comforting logic starts to fall short when you consider the hidden costs of owning a home. Just as an individual moving out of his parents’ home must deal with responsibilities he never considered before – like cooking – a homeowner must consider additional costs and expenses that he did not have to worry about when renting. Here are five such expenses to consider and advice on how you can reduce their cost.

1. Home inspections

The first hidden costs show up before you even close a deal. You can take a look at the house all you want beforehand, but many lenders will require you to hire a professional home inspector before you sign. Even if the lender does not, you should hire one anyways. A professional home inspector can make sure that your home does not have any sudden surprises such as poor wiring or a termite infestation, and require that the seller fixes those problems.

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Hiring a professional home inspector can cost a couple hundred dollars, but it can save you a great deal and prevent you from buying a faulty home. Just be prepared to eat the initial expense.

2. Closing costs

You inspected the home, found that everything is good, and have your offer accepted. Then you find out that you have to pay an additional few thousand dollars up front in the form of closing costs. Closing costs are additional fees such as escrow fees, attorney fees, and other expenses that are usually on the buyer. Zillow states that the average buyer pays about $3,700 in closing fees.

While it is not possible for a buyer to completely avoid these costs, it can be lowered. Shop around with multiple lenders to try and get the best deal on your mortgage and ask if the seller may be willing to cover some of the costs.

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3. Moving

You may be able to get out of moving expenses if you have a wide cadre of friends willing to help you out and if your home is nearby. But the odds are that you are going to have to hire a moving company. If you rely on a professional moving company, then the average cost of moving out of state is over $4,000

If you are moving a long way and want to budget, then you can lower the costs by making sure you are only moving the essentials and possibly taking care of the move yourself with a U-Haul truck. But be prepared to pay a few extra thousand dollars for a clean move without chaos.

4. Maintaining your home and yard

One of the biggest changes towards owning a home is the fact that when something goes broke, it is on you and not the landlord to fix things. And there is always something that needs to be improved or fixed.

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You may be willing to mow the lawn and take care of the yard work yourself. However, that still entails the cost of purchasing the necessary equipment yourself as well as the time needed to mow the lawn and so on. Then there are other expenses such as fixing your heating, air conditioning, and plumbing. While it is possible to handle issues like this if you really know what you are doing, it is just as likely that you burst a main and lose far more money in the resulting repair costs.

You do not want to skimp on home repairs if you want to uphold its value, so budget a certain amount of money every year for repairs. There are a few guides for how much to save, but you should generally be looking to save something around one percent of the home’s value every year.

5. Property Taxes

Death, taxes, you know the saying. But what you may not know is that your mortgage’s monthly bill will also account for property taxes and homeowner’s insurance. This is especially true if you’re looking to earn an investment with a 1031 exchange property. If you use an escrow account, which is required if your down payment is less than 20 percent of the home’s value, then you don’t pay your property taxes directly. Instead, you send your money to a mortgage company who pays your taxes for you. And there is also the scenario where you can be hit with a payment for a couple months’ worth of property taxes right when you move in.

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Dealing with property taxes can be incredibly confusing and varies from area to area. The best advice is to be prepared and talk with your mortgage company about how much you will have to pay as well as any potential surprises.

Featured photo credit: Moyan Benn via flickr.com

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Last Updated on January 21, 2020

The Best Way to Create a Vision for the Life You Want

The Best Way to Create a Vision for the Life You Want

Creating a vision for your life might seem like a frivolous, fantastical waste of time, but it’s not: creating a compelling vision of the life you want is actually one of the most effective strategies for achieving the life of your dreams. Perhaps the best way to look at the concept of a life vision is as a compass to help guide you to take the best actions and make the right choices that help propel you toward your best life.

your vision of where or who you want to be is the greatest asset you have

    Why You Need a Vision

    Experts and life success stories support the idea that with a vision in mind, you are more likely to succeed far beyond what you could otherwise achieve without a clear vision. Think of crafting your life vision as mapping a path to your personal and professional dreams. Life satisfaction and personal happiness are within reach. The harsh reality is that if you don’t develop your own vision, you’ll allow other people and circumstances to direct the course of your life.

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    How to Create Your Life Vision

    Don’t expect a clear and well-defined vision overnight—envisioning your life and determining the course you will follow requires time, and reflection. You need to cultivate vision and perspective, and you also need to apply logic and planning for the practical application of your vision. Your best vision blossoms from your dreams, hopes, and aspirations. It will resonate with your values and ideals, and will generate energy and enthusiasm to help strengthen your commitment to explore the possibilities of your life.

    What Do You Want?

    The question sounds deceptively simple, but it’s often the most difficult to answer. Allowing yourself to explore your deepest desires can be very frightening. You may also not think you have the time to consider something as fanciful as what you want out of life, but it’s important to remind yourself that a life of fulfillment does not usually happen by chance, but by design.

    It’s helpful to ask some thought-provoking questions to help you discover the possibilities of what you want out of life. Consider every aspect of your life, personal and professional, tangible and intangible. Contemplate all the important areas, family and friends, career and success, health and quality of life, spiritual connection and personal growth, and don’t forget about fun and enjoyment.

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    Some tips to guide you:

    • Remember to ask why you want certain things
    • Think about what you want, not on what you don’t want.
    • Give yourself permission to dream.
    • Be creative. Consider ideas that you never thought possible.
    • Focus on your wishes, not what others expect of you.

    Some questions to start your exploration:

    • What really matters to you in life? Not what should matter, what does matter.
    • What would you like to have more of in your life?
    • Set aside money for a moment; what do you want in your career?
    • What are your secret passions and dreams?
    • What would bring more joy and happiness into your life?
    • What do you want your relationships to be like?
    • What qualities would you like to develop?
    • What are your values? What issues do you care about?
    • What are your talents? What’s special about you?
    • What would you most like to accomplish?
    • What would legacy would you like to leave behind?

    It may be helpful to write your thoughts down in a journal or creative vision board if you’re the creative type. Add your own questions, and ask others what they want out of life. Relax and make this exercise fun. You may want to set your answers aside for a while and come back to them later to see if any have changed or if you have anything to add.

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    What Would Your Best Life Look Like?

    Describe your ideal life in detail. Allow yourself to dream and imagine, and create a vivid picture. If you can’t visualize a picture, focus on how your best life would feel. If you find it difficult to envision your life 20 or 30 years from now, start with five years—even a few years into the future will give you a place to start. What you see may surprise you. Set aside preconceived notions. This is your chance to dream and fantasize.

    A few prompts to get you started:

    • What will you have accomplished already?
    • How will you feel about yourself?
    • What kind of people are in your life? How do you feel about them?
    • What does your ideal day look like?
    • Where are you? Where do you live? Think specifics, what city, state, or country, type of community, house or an apartment, style and atmosphere.
    • What would you be doing?
    • Are you with another person, a group of people, or are you by yourself?
    • How are you dressed?
    • What’s your state of mind? Happy or sad? Contented or frustrated?
    • What does your physical body look like? How do you feel about that?
    • Does your best life make you smile and make your heart sing? If it doesn’t, dig deeper, dream bigger.

    It’s important to focus on the result, or at least a way-point in your life. Don’t think about the process for getting there yet—that’s the next stepGive yourself permission to revisit this vision every day, even if only for a few minutes. Keep your vision alive and in the front of your mind.

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    Plan Backwards

    It may sound counter-intuitive to plan backwards rather than forwards, but when you’re planning your life from the end result, it’s often more useful to consider the last step and work your way back to the first. This is actually a valuable and practical strategy for making your vision a reality.

    • What’s the last thing that would’ve had to happen to achieve your best life?
    • What’s the most important choice you would’ve had to make?
    • What would you have needed to learn along the way?
    • What important actions would you have had to take?
    • What beliefs would you have needed to change?
    • What habits or behaviors would you have had to cultivate?
    • What type of support would you have had to enlist?
    • How long will it have taken you to realize your best life?
    • What steps or milestones would you have needed to reach along the way?

    Now it’s time to think about your first step, and the next step after that. Ponder the gap between where you are now and where you want to be in the future. It may seem impossible, but it’s quite achievable if you take it step-by-step.

    It’s important to revisit this vision from time to time. Don’t be surprised if your answers to the questions, your technicolor vision, and the resulting plans change. That can actually be a very good thing; as you change in unforeseeable ways, the best life you envision will change as well. For now, it’s important to use the process, create your vision, and take the first step towards making that vision a reality.

    Featured photo credit: Matt Noble via unsplash.com

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