Choosing a Home That Will Not Put You at Risk for Bankruptcy
29th October, 2010 - Posted by admin - No Comments
When deciding on a house, you should not only consider how much you can afford in a mortgage, but also how much you can afford yearly or monthly on maintenance and taxes. Property tax is generally around one percent of your home's assessed value, and can become a large expense that you will need to consider when creating your annual budget.
Miscalculating expenses, such as property taxes, can be one of the problems that lead to bankruptcy. Some people find themselves needing to file bankruptcy because of sudden medical expenses or other emergencies that they were not financially prepared for in their budget. This makes it extremely important that those who are seeking to purchase a home calculate how much they can afford to put into a house on a monthly basis. This includes not only things such as a mortgage, but also includes costs for upkeep and home insurance. Costs for upkeep include the cost of utilities such as water and electricity, the cost of sudden repairs for things like weather damage, as well as the money you'll spend on home décor.
It is generally advised that those seeking to create a budget only calculate spending around sixty percent of their overall income. The other forty percent should be reserved and saved for such financial emergencies, such as a higher tax than you were expecting. This will help protect you from going into debt if you happen to have miscalculated an expense.
However, to avoid the surprise of extra monthly expenses when purchasing a home, consider meeting with an adviser or realty agent, who will help you create an accurate monthly budget for purchasing and taking care of a home and will make sure that you are not taken by surprise at the end of the year when paying taxes, or on a monthly basis as you discover higher maintenance costs than you expected.
Posted on: October 29, 2010
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