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Some people know about the property tax, we know about homeowners insurance. But there's some other fees that wait.
But before we go to other slots, So because we didn't, we didn't. I just want to make sure people get that the whole thing. So can we go back to that. Can we go back to the slot?
Ye?
So utilities is a big one because this is why a lot of people using you know, different type of energy efficient things for their homes and that that that can save a lot of money, right and even setting up utility a lot of times as a process, water, gas, all that type of stuff. And then of course the homeowner's insurance. But the homeowners insurance is vitally important now, especially you look at California fires, you look at Florida, you look at floods. So, okay, the taxes we we
just talked about that, that's important. The mortgage is pretty going to be straightforward as far as on the bank side, you shouldn't understand those terms. But this homeowner's insurance and the utilities can you can you talk about that because that's that's something that people need to really have an understanding of what they're getting themselves into before they actually get the home.
Absolutely, so let's jump into utilities. If you're looking for a single family home, it would be ideal and I want you to write this down. Oftentimes agents don't do this. Ask the previous homeowners to provide you with a statement of what their utility bills are, like, what are they're paying on average for their light bill? What are they paying on average for their gas bill? Those are two controllable expenses that you don't really consider when you're buying
a home. Why is this important. Let's just say you're buying a five thousand square foot home on a basement and you're coming from a two bedroom apartment that's maybe thirteen hundred square feet. The difference in the amount of heat that's required to heat that space, the amount of HVAC that's required to cool that space, it could be almost the cost of it could really be thousands of dollars.
So while you're out here assessing what your expenses should be, ensure that you get that information from the current homeowner before making your purchase. So utilities are such a big deal. And then when we talk about homeowners homeowners association fees, So you guys are in New York, so a lot of times you guys are buy not y'all, you know, you deserve to be rich, but a lot of people are buying condos, townhouses, things like that, and there are
a lot of times those fees are included. So you get into an HOA, they'll say, here's an additional I saw a condo here in Atlanta where the hoafee is fourteen hundred dollars a month, but it includes the utilities, and then it includes amenities so it includes so it kind of offsets, but you have to understand how that will affect your monthly payment. So hoafees is a huge deal. I think we get a big bad rep. I don't want a house in the HOA. It's good to it
and it's not so good. The good parts of it HOA is if you are in a neighborhood, a single family neighborhood, and everybody has to maintain the exterior a certain way. Everybody has to maintain the grass their a certain way. It actually helps with your value appreciation. You're gonna hear me say value appreciation a lot because I want you to understand that is the number one reason for getting into real estate and owning a property is
value appreciation and ownership. That's it. So of course HOA fees is something you need to consider and see what they're what's included in that, And then routine maintenance. I most recently was consulting with someone and they have to get an entire new HVAC system. They got a quote for twenty thousand dollars. Like, you can't call the landlord. You are the landlord. You are in charge of those fee of that maintenance. So getting routine maintenance on your
property and accounting for those additional expenses. I hate to scare people. Everybody has this scare tactic. I'm gonna tell you, and this is not even like. Look into any type of home warranty companies that offer complete protection. So when you get a home warn company that helps you with
the room team maintenance. So instead of you being responsible for that twenty thousand dollars fee to replace the system, if you were paying a monthly fee into a home warranty company, then you could call them the same way you would call your landlord. Why do I want to say this because I'm sick of people try to scare people into not owning a home, saying my landlord can
pay for that. Well, if you were paying a fifty dollars fee per month and your HVAC system went out tomorrow, you would be able to call your home warranty company to cover it. So don't allow these expenses to scare you. But be very aware that these expenses are there. So your job is to protect yourself. So again, unexpected expenses are going to happen. You're going to have to get your gutters cleaned every year. You're going to have to get your extere of your property pressure washed every year.
Some people do it every quarter. You have to consider that you want a home inspector to come inspect your property every single year, not just when you buy the home. When you initially buy the home, you do get a home inspection because you're negotiating with the seller for any defects in the property and you don't want to purchase a property with the defect. But what happens when you live in a home. There could be underground links that
you are not aware of that continue to happen. Your HVAC could be at the bottom of like at the end of its lifespan. So you get a home inspection every single year. That's about five or six hundred dollars. But what it does is preventative maintenance. That preventative maintenance now you can call your home warranty and your handyman to address issues before they become too expensive. No one talks about that type of maintenance, but that's what it
requires to maintain a home. So outside of that, you have the utilities, you have the just maintaining the integrity of your property. But then you also got to account for certain things. And I'm going to focus on single family homes because it's completely different maintenance than having a condo. A single family home, you may want to take into your budget, at what point do I have to replace the roof? And an average roof span is fifteen to twenty five years, so you have to think about that.
At what point do I have to replace the hvac system? They keep changing the free on and the diferent things in the HVAC system. That's typically five to ten years. Some of them are saying twenty years. So what you want to do is budget that get and I will not stress this enough, get a home warranty. Get a home warranty, and then make sure when you purchase your property you're getting scheduled and consistent maintenance of your home that.
Is not There's a part here, like we talked about the homeowners insurance, but most people don't know about mortgage insurance. And I'm assuming if a lot of people are doing being first time home owners and they don't have the twenty five percent down payment or twenty percent down payment, they're going to flow in this category. So talk about what that is and kind of give it like an explanation of what mortgage insurance actually entails.
Yeah, so mortgage insurance covers the lender. Mortgage insurance does not cover your property. It covers the lender in case you default on the loan. So when you're paying mortgage insurance, a lot of people are like, do I have to pay it? Yes, you have to pay mortgage insurance unless you're putting twenty percent down. If you're putting less than twenty percent down. At some point, though, what does happen?
You do pay the private mortgage insurance. But at some point when you have invested more than twenty percent towards the principle of your mortgage, you can actually call your mortgage lender and say, hey, I have invested this much. I want the mortgage insurance to come off. The mortgage insurance will not cover your house if it's damaged. The mortgage surance insurance doesn't cover your house, God forbid, if
there's a fire. It only covers the lender because the lender is taking a chance on you because you don't have enough skin in the game. You have enough skin in the game for them to say, hey, we're going to give you this mortgage, but you're putting less than twenty percent down, So we need insurance on top of what on top of what we're giving you, just in case you default and you cannot satisfy the loan. That is what mortgage insurance is, and you can't get around it.
So what's some best practices as far as for the homeowners insurance?
Right?
For the homeowner insurance, what's best practice that people should be aware of getting homeowner insurance policy?
You get what you pay for cheaper is not always better. And I feel like oftentimes when you're shopping with different home insurance companies, and I have great relationships with homeowners insurance companies, you're just thinking this is going to affect my monthly payment. It is. They take the calculation of what it will cost you for twelve months and then you're paying on it every single month as a part of your ES growth. Your ES grows include your insurance
and your taxes. Right, So when you're thinking about, okay, I have to pay this amount, I would say shop and tell them the truth. If you have three Rolex rotches in the house, right, and you just did an upgrade in your kitchen and did soft clothed cabinets and Wolf appliances. You need to tell your insurance company about this, because what happens is you're getting insured that the house will say you buy a house with you know ge appliances. You're just happy to own a home. You read the
book I Deserve to Be Rich. You do a stock option play, and now you want to renovate your kitchen now and you go and do this whole renovation. It's one hundred thousand dollars renovation, and you don't report it to your homeowners insurance company. What happens in the interim if your house catches on fire, like I said, like what happened in La and things like that, if you never paid the difference in that cost, it's not covered.
So that's why keeping up with your homeowner's insurance and making sure that you tell your preferred insurance agency the truth about your assets. They can understand how much it would cost to actually rebuild the property. Because there's different levels to insurance, cheaper is never better. I will always say, be educated about the level of insurance that you receive so in case something happens, because that is what insurance is for your cover.
And then also it's important because they had a study that like I think thirty percent of homeowners actually they're paying more money and all the ancillary stuff than the actual mortgage. So you got to have a budget. You got to have an idea of how much money you're going to spend because if not, if your budget is like twenty five hundred and your mortgage is two thousand, you think that I got a five hundred dollars surplus.
But then when you add all these utilities and the taxes, and then the insurance and then you know maintenance upkeep, and the budget is actually your two thousand dollars a month mortgage actually turns into forty five hundred dollars a month that you actually end up spending. That causes a lot of problems.
Yeah, and one of those taxes that I don't even see in there is school tax. Right, Like everybody wants to live in a great neighborhood and go to the great school. Well that cost and so that that's something that's getting paid semi annuary or sometimes quarterly. So just keep that in mind, like when you want to move
to that great neighborhood, because it's preceded school. The people that own property there, they're paying school taxes, which is another amount that you're gonna have to put into that that budget that you apparently thought you had when you were starting to buying process.
Oh and this is one thing I want to tell you guys that I'm a I'm a professional, right, so this should that happened to me, But it happened to me too. With homeowners insurance one of my investment properties. I'm just like, why is this monthly note so high? What happened? Right? I did put down twenty percent, so I just pay yearly. I pay annually. And it slipped my mind to renegotiate the terms of my homeowner's insurance policy. So they increased my homeowner's insurance policy beyond the limit
that I wanted, was comfortable with. So always remember you have to advocate for yourself and every year when it's time to renew that policy. You do know, you don't have to be stuck with who you started with. You can actually shop around. Let them know you're shopping around, Shop three different people. Tell them you're shopping. Get the lowest rate, and then every but get the lowest rate that has the highest coverage. Let me say that one
more time. Get the lowest rate, that has the highest coverage, and that will help with controlling your overhead expenses.
Timely importantly important.
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