Often times, people want to simplify this question with “Yes, I can afford the mortgage.” There is so much more to look at than just the mortgage payment. There are also things to consider such as:
Refinance Cost
If you decide to keep the house after a divorce, you will most likely need to refinance the loan to get the loan in your name only. Refinancing a loan is several thousand dollars depending upon the value of the house.
Home Owner’s Insurance
It is important to protect your assets with insurance in the event unforeseen damage occurs. If you have a loan on the house, home insurance is mandatory.
Taxes
Home owner’s are required to pay yearly taxes on the value of the house they own. Depending on if you live in city limits, you pay both state and city tax.
Lawncare
Do you have the necessary equipment and time to keep up with the weekly demands of lawncare? If not, this is an added weekly expense for the majority of the year that is often times forgotten about that can really add up.
Repairs
Repairs can be costly and come at the most inopportune times. It is recommended to have an “emergency fund” savings account for unexpected repairs. Regular maintenance can reduce costly repairs, however, repairs are inevitable when owning a house. Neglecting repairs will greatly reduce the VALUE of your house.
Regular Maintenance
It is really really important to have regularly scheduled maintenance done on your house. Your house is typically your biggest financial asset and often regular maintenance is neglected and put off until something quits working. An example: the HVAC units are one of the most expensive items in the house and yet the majority of homeowner’s don’t have a scheduled maintenance agreement set up. I can not stress how important regular maintenance is. Regular maintenance greatly increases the lifespan and VALUE of your house.
Savings/Retirement
It is important to always have a savings account. I recommend setting up automatic contributions to savings from every paycheck. Even better is to have NO debit card attached to the savings account.
Vacation Fund
It is important to go on a vacation once in a while. It doesn’t have to be an extravagant vacation, however, it is good for our mind body and soul to “refresh”.This is a necessary item to consider when making the decision to keep the house.
House-Broke
One of the biggest stressors in life is our finances. Lack of finances greatly impacts our quality of life and happiness. The amount of income in not important; what IS important is living WITHIN our income. Home ownership is a wonderful and financially wise decision. However, it is important to ensure the overall cost of home ownership is within your budget. When a reduction of household income occurs; such as in a divorce for example, it is really important to realistically look at income and a comprehensive budget to decide if keeping the house is the best financial decision.
About Melissa Elliott
Melissa Elliott is a Realtor with Keller Williams Preferred Realty, and has lived in the Raleigh, NC area since 1996. She has a passion for helping people, and has been in the helping/service profession her entire career. Find out more about Melissa and her services at www.elliottrealtync.com.
