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How much should I budget to own my own home?

Aside from the down payment, the three largest expenditures involved with the purchase of a home are usually your monthly mortgage payment, insurance and taxes. Obviously, the amount of your mortgage payment depends upon your down payment, rate of interest and the price of the property. Take, for example, a home that has a $100,000 mortgage. An 8% fixed mortgage for 30 years, will run approximately $734 per month. What about taxes? The rate will oftentimes vary from city-to-city, but generally you might expect your yearly tax bill to total around 2% of the purchase price.That means, for a home with a market value of $100,000, yearly taxes might run around $2,000. A local real estate agent can help prospective homeowners refine these figures. In addition, it is important to keep in mind that there are many additional expenses incurred with home ownership, some of the most obvious are utilities and trash collection. Smart homeowners should also budget for one other item--maintenance and upkeep of the home. If possible, a small amount should be set aside each month to pay for those "rainy day" repairs such as painting, plumbing (hot water heaters, garbage disposals), adding storm windows (to improve energy usage), insulation (in attics), etc. And, if you live in a home long enough there are inevitable repairs - e.g., the cost of roof replacement. But home ownership is not just a one way street. That is, aside from spending money on repairs and maintenance, homeowners can profit from their property. The most significant benefit is the tax deduction. It is no secret that among the last real income tax deductions available to consumers today are the interest paid on the home loan and the property taxes. This can amount to thousands of dollars in deductions each year. And, of course, the primary benefit of home ownership is appreciation (equity that builds every month). A home, aside from being a place that provides shelter, can be a profitable investment, and the rising value of the property oftentimes provides another "savings" account. So, when it comes to buying a new home, remember one thing...the purchase of a property requires budgeting and planning, but it can also provide the buyer with a long-term investment and a return that is hard to beat.

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