Pricer’s Points: Buying A Big House Comes With Big Hidden Costs | Anastasia Ivanov

house sq ft price

You have to consider all the angles before buying a home. While owning big beautiful home might be your dream, the cost of owning one over 30 years can quickly turn it into a nightmare.

It’s important not to let short-term decisions impact long-term financial goals like retiring early or saving for your child’s education.

When searching for a home, most people only pay attention to the listed price of the house. Agent fees, legal fees, home insurance, furnishing, and taxes drive up the price of a home by close to 30% of the listed price or more. But even these pale in comparison to the amount of interest paid on your mortgage.

Let us take a look at specific numbers. Each 500 sq feet of house we buy cost adds $42,000 on average to the list price.

But that’s not all, there are closing costs, the cost of furnishing the house, which can be up to a whopping 20% of the home price. Property tax gives you a pinch at 1.31%, energy costs chop-off $1.03/sq ft and maintenance hacks off 1% of the home price per annum.

Your total bill for your modest 500 sq feet over the next 30 years, assuming a mortgage repayment rate of 4%, will end up at a staggering $120,754. If like most Americans you want to live in a 2,500 sq ft home, your total cost jumps up to $602,871.

This may not sound so bad, but remember that the listed price of the 2,500 sq ft home of $210,000 might make you commit to something you cannot maintain in the long-run. In other words, the total cost of every home over 30 years can cost almost three times the listed price.

While a small house may not seem appealing to many, the potential for renovations and creative exploration abound. You might also want to consider what you could do with the money you would end up saving, such as putting it into ETFs or mutual funds and investing in your future.

Yes, your real estate agent might try and convince you to go for the big dream house, but after this infographic, you now have the information you need to make an informed choice.

The Hidden Costs of Buying A Bigger House

 

Read more here:

The Hidden Costs of Buying A Bigger House – InvestmentZen.