oct newsletter: 4 things you need to know about homeownership [2019]

October 13, 2019

Practical thinking is just as important as critical thinking. We teach kids how to solve for x, but don’t teach them how to do their taxes, cook a meal, or write a cover letter for their resume. Some schools offer those items in elective courses, but they are optional. Unfortunately, in life, they are not optional. All aspects of homeownership would be on that list if I were to make one.

I personally don’t own a home (and here’s why), but I’ve sold enough of them to know a few things about owning one. Some of these items may sound elementary. However, as a detail-oriented person, I’ve concluded it’s a mistake to get lost in details and neglect to state the obvious.

1. You are responsible for all home maintenance. If something breaks, you are responsible for fixing it, unless you have a home warranty. Home Warranties cover certain items (not everything) and will cost you a $75-100 deductible for repairs/replacement. However, just because you have a home warranty and mandated homeowner’s insurance doesn’t mean you won’t have any major repairs emerge. After you buy your home, it’s best to have a separate account, money, and time set aside for this purpose.

1a. Read your HOA documents. Some Homeowners Associations will cover exterior maintenance (basically landscaping), some won’t, but 99.99% sure they’re not going to fix your refrigerator or your HVAC unit. I’ve had clients walk into the process thinking that the HOA acts as a landlord in that they’ll fix anything that breaks, and that is not true.

2. Expect any renovations to take about 25 percent longer than you think, and expect them to end up being 25 percent more expensive. Contractors’ pricing and availability will vary, but in a market saturated with demand, they can and will charge what they want to and get it. If you’re getting exterior work done, the job will be weather dependent as well. An existing house (as opposed to new construction) is like getting one of those wonder ball candies (if you’re under the age of 26, click here (https://en.wikipedia.org/wiki/Wonder_Ball) ); you never know what you’re truly dealing with until you rip it open, and you can’t rip it open until you own it. Home renovations are nothing like they’re portrayed on television – I’m sorry to say – so it’s best to anticipate the unanticipated and leave some wiggle room in your budget for safe measure. The process will be much less stressful if you set your expectations according to reality; that’s true for most things in life.

3. Do not respond to anything you get in the mail requesting $$$ in exchange for your closing documents, title, mortgage bill, etc. This is definitely more applicable in the first year of owning your home, but I get screenshots of scam documents from clients all the time, even years after I sold it to them. When in doubt, call the title company, lender, or myself before placing a check in the mail.

4. Wait to buy a home for the right reasons. Not unlike other life events, there is no magic formula or age when it comes to buying a house either. Go to college when you know what you want to do. Or go because you want to play your sport (raising my hand here). Drop out to follow a dream. Don’t go at all. Marry your high school sweetheart, grow up together, then grow old together. Wait to get married until after you’ve learned a few hard lessons on your own. Don’t get married at all. Have children at 26, or have them at 36. Wait to buy a home when you’re ready to make that space your space, or wait until you’re ready to make an investment that will be time-consuming and expensive, but long-term financially beneficial.

Everyone’s timing looks different; be patient with your own. Know yourself and your priorities first (easier said than done); most everything will fall in line after that.

All my best,

Syd Phil