For many people, owning a home may be a better financial decision than renting. This is because homeowners can take advantage of tax credits while they build equity. However, it’s important for Virginia residents to pay attention to the additional costs of homeownership as they decide whether they should rent or buy.
While homeowners typically plan to pay taxes and insurance, they may not count on those expenses increasing as rapidly as they sometimes do. A drastic increase in taxes could derail a family’s budget. Although people know they’ll be responsible for maintenance when they purchase a home, they don’t always realize how much of a budget could be spent on repairs. Buyers should prepare to spend anywhere between 1 and 4 percent of the home’s value in annual upkeep costs. Those who don’t plan for these expenses may rely on credit cards to cover the cost to maintain a property.
A recent study by NerdWallet discovered that people who purchase a home pay twice as much in credit card interest as those who rent. This could be because they don’t budget for home maintenance or their property is simply too expensive to afford. Overwhelming credit card debt could make it more difficult to make mortgage payments or cover the costs of repairs.
Fortunately, there are a couple of ways to resolve a debt problem. Some homeowners could benefit from downsizing. However, others might find that filing for Chapter 13 bankruptcy is a more effective resolution. A bankruptcy attorney may help a homeowner determine the best means to resolve their debt problem. Chapter 13 bankruptcy allows people with a stable income to reorganize debt into an affordable payment plan.