Home costs encompass more than mortgage

Too often, however, the home-buying process is handled hastily and with inadequate preparation, according to Janet LaFon, a family financial education specialist with the University of Missouri Extension in Jasper County.

“Most people usually begin looking at homes before they’ve determined how much they can afford to spend,” LaFon said in a news release. “This makes them extremely vulnerable to all the eye-catching, attractive features that can add to the cost not only in dollars but in time and energy for maintenance.”

Taking a thorough look at existing and future space needs and considering the ages of family members is a good first step for families considering buying a home.

“A family with growing children will need more of their income for food, clothing and education, and (will) have less money for a house, than a childless couple or one whose children have already left home,” LaFon said.

Lifestyle issues, such as the amount of time spent at home and the frequency of entertainment, also should be considered.

A general rule of thumb, according to LaFon, is to spend between 20 percent and 30 percent of after-tax income on housing.

She added, however, that it’s important to remember what has to be covered by that percentage of income.

The loan itself will require monthly mortgage payments, with the payment having two parts: principal and interest. The longer the term, the lower the monthly payments will be, but the overall cost of the loan will be higher.

In addition to the mortgage, however, families need to be aware of other operating costs that come with homeownership, including taxes, insurance, utilities, maintenance and household furnishings or appliances that may need to be replaced.

“All of this may sound a little discouraging to the potential home buyer, but it’s important to consider all of the facts before getting into a deal that the family may later regret,” LaFon said.[[In-content Ad]]