When you first go shopping for a property in Hawaii, home loan budgeting – figuring out how much a comfortable monthly mortgage payment would be – pretty much dictates the price range you will be considering.
Some listings do the lion’s share of the home loan budgeting work for you through a ‘payment options’ box that provides a thumbnail mortgage payment calculation. You enter a percentage of the down payment, amount, and the type of loan – and at the speed of light, it calculates an estimate of the monthly fee. Those that also include the latest property tax bill and an insurance estimate come up with a pretty accurate picture of how affordable a given property will be.
An associated cost that home loan budgeting alone doesn’t address is the additional operating cost every homeowner runs into—the maintenance figure. Since those costs are dependent on the type and condition of the property, most experts advise future homeowners to anticipate 1% of the purchase price per year; a number that is transparent. There are a couple of approaches that can improve on it.
The first way is to invest in a home warranty, which has a set cost. Home warranties are the forms of insurance that cover the repair or replacement of included items. This way can be a relatively economical way new Hawaii homeowners can buy some budgetary peace of mind while familiarizing themselves with the ins and outs of their new Hawaii home. But it’s also an occasion where it’s particularly important to read the fine print – the only way to be clear on what the home warranty covers and what not, and what the deductibles are. It’s also important to get an idea of who the subcontractors will be.
The other way to get a bead on possible future maintenance outlays is to anticipate likely significant replacement costs. Wood shake roofs, for instance, should last about 30 years, while fiber cement shingles last five years less (and rough weather conditions can lop years off those life expectancies). Wood floors can last for a century, as can marble and slate – while carpet usually needs to be replaced every eight to 10 years.
When it comes to included appliances, most Hawaii homeowners will agree that today’s models don’t seem to last as long as they used to. It may be because electronics have added improved functionality…or it may be a result of flimsier manufacturing. At any rate, the National Association of Homebuilders’ research tells us that dryers (both gas and electric) have average life expectancies of 13 years—as do cooktops, electric ranges, and fridges. Washing machines last an average of 10 years; while microwaving ovens last nine years – as do dishwashers and compact refrigerators. Freezers last 11 years, garbage disposals, 12…but (uh-oh!) trash compactors average only 6. If the previous owner can furnish original warranties or purchase slips, it should be able to come up with a ballpark idea of when to expect replacement outlays.
Home loan budgeting will deliver the all-important mortgage payment amount, but it’s prudent to leave ample some budget for the other inevitable expenses.