Anytime you hear someone speak negatively about the burdens of homeownership, most commonly they are speaking about a large capital expense in their home.
A capital expense or capital improvement is a large expense for an improvement or repair to a property. Things like: HVAC systems, roofing, driveway, floors, etc.
Most mortgage loans are at a 30-year fixed term. This means the homebuyer is usually signing up with the idea of staying in the home for a long time.
Over the course of that loan, it is not a question if the home will need repairs and updating, it is a certainty! And the cost of these things cannot be overlooked by prospective homebuyers.
Replacing an HVAC system or getting a new roof is not cheap. And not having a plan to pay for these costs when they are needed can mean disaster for one’s finances. This is where a home can seriously start to own you…
If you don’t have the money to keep up with the maintenance required then you may find yourself with a home that is depreciating, not appreciating. Appreciation is the goal, and all homeowners expect it when they purchase a home and take out a mortgage.
Homeowners expect that when all the principal and interest is paid back to the bank and the home is owned free and clear. It will have appreciated immensely in that time and they will be able to sell it for more than they paid for it. If the home had been kept up with and the necessary updates were made over the course of that time, that very well may be the case!
The fact of the matter is until the day your home pays you, you are paying for it! So it is crucial to keep up with the maintenance and updates required to keep the home at its full market value so when you do sell, you can maximize the capital gain you can see from the property.
If you do not keep up with maintenance on your home it will not be worth as much to prospective homebuyers. This means all those years of working to pay the mortgage down will result in walking away with less than you paid in principal and interest for the home.
If planning to buy a home make sure to budget for these expenses as they will certainly pop up over the course of 30 years. If you find yourself in a situation where your home is falling apart and you can’t afford it. We suggest selling it right away before it gets any worse.
