Your home can be an expensive asset. It can have a huge impact on your wallet. In the recent times, the price of real estate is rising but still there are expenses associated with it. Unless you are aware of the perils of home-ownership, your property may make you go broke.
5 Scenarios where your house can make you go broke
Here are 5 scenarios which you should avoid in order to avoid going broke with your property:
1. Buying above price range: The expensive homes can be impressive to look at. But if you don't want to go broke and blow up your budget, then you should avoid looking at such properties. You should evaluate your expenses and then decide which price range will be best suited for you. Also, the price range will be mentioned in your pre-approval letter. While you decide on the price range, you should also take into consideration various supplemental expenses like insurance, taxes, repairs and home-owners association fees. However, it should also be noted here that the realtor should also not show you properties that are above your price range.
2. Primary investment: House is an asset definitely. But the recent real estate down turn has shaken the belief that individuals can build up their wealth through their property. Now the situation is such that you need be extremely savvy about home-ownership. If you don't want to go broke, then you should not make your home your primary investment. You should make sure that your have other forms of investment as well in your financial portfolio.
3. Overlook minor repairs: Many a times, in order to save few bucks, we tend to ignore minor repairs needed to the property. If you do not manage your property well and repair it on time, you will end up spending huge sums on money on big repairs later on. This can make you a broke. If you do not change the filter on time, you will end up shortening the life span of the AC. So, you will become liable for spending more money to replace the AC.
4. Hiring a less experienced person for renovations: A licensed contractor will be an expert in this field. A handyman or an untrained professional may not know the nuances of the job well. In the long run, you will end up paying more on the property. Moreover many a times, people even avoid taking out proper permits for their work and en up paying more for the same work.
5. Two homes: Many a times, you will be able to find home-owners who have two homes. May be they have outgrown their primary home and so that had to buy a new home and now they are stuck with two homes and mortgage payments. It is always suggested that you should sell off your existing home and then look out for a new house. To sell off your home fast, you can lower the price of the property.
If you avoid the above mistakes, you will be able to avoid going broke due to your property!