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When you figure out whether you can afford a home, don't forget to take utilities into account. Ask the seller about monthly costs for electricity, heating fuel, cable, Internet access, water, trash removal, and so on. Make sure that you can afford these charges along with the PITI.
Depending on the terms of your loan, your monthly payment may comprise PITI (principal, interest, taxes, and insurance) or just principal and interest. If you pay PITI each month, the lender holds the money for taxes and insurance in a special account and pays these costs on your behalf when they come due. If you pay just principal and interest, staying current with tax and insurance payments is your responsibility.
Whether you buy a brand-new home or an old fixer-upper, sooner or later you'll have to pay maintenance costs. With all the rewards of home ownership comes responsibility - and that means you're the one who pays the bills when the lawn needs mowing, the shutters need painting, or there's a foot of snow in the driveway. You'll invest your time or your money - and probably both - in routine upkeep.
In some areas, you may have to pay a one-time connection charge to set up utilities. If that's the case in your neck of the woods, add those connection charges to your one-time costs.
Aside from routine and seasonal maintenance, be prepared for other expenses. You may have to replace the water heater, buy a new dishwasher, fix a leaky roof, or replace rotting trim. When an appliance dies without warning or other issues crop up unexpectedly, you need to find the money to fix the problem. Once you have sufficient equity in your house, you may decide to borrow against that equity. But it's a good idea to have an emergency fund that you can tap when things go wrong.
You may decide to remodel. Whether you replace carpets, redesign the kitchen, build an addition, or wallpaper a room, this can be a significant expense. on the plus side, remodeling can increase the value of your home and build equity faster, so it not only adds to the enjoyment of your home, it's a good investment.
