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More than 60% of Americans own their homes, and while there are certain benefits to ownership, there’s also a downside: the cost.

You may have thought that coming up with a down payment was the greatest financial hurdle you’d face, but as you’ll soon come to learn, there are numerous expenses associated with owning a home. Here’s how to handle them.

1. Create a new budget

Given that your monthly mortgage payment is bound to differ from your previous rent payment, it might seem like a no-brainer that you’ll need to adjust your budget accordingly. But there’s more to it than that, because you may find that other costs change by virtue of your new home. For example, if you move from a two-room apartment to a 2,000-square-foot house, you can bet on your heating and electricity costs going up. Similarly, if you suddenly have a lawn to maintain, you can expect to spend more than you would renting an apartment.

Rather than just substituting your new mortgage payment for your previous rent payment, spend a few months tracking all of your expenses and update your budget to reflect the actual costs of living in your new home. You may come to find that you’re spending more than expected, in which case you’ll need to adjust your flexible expense categories, like leisure, to compensate.

2. Prepare to spend money on repairs and maintenance

You’re probably aware that you’ll spend some money on maintenance and repairs for your home, but you may not realize just how much you may end up parting with. Most homeowners spend 1% to 4% of their homes’ value each year on repairs and maintenance.

So if your home is worth $300,000, expect to shell out anywhere from $3,000 to $12,000 a year on upkeep. And if you need to do something major, like replace a faulty heating system or roof, your costs could climb even higher.

You should therefore aim to pad your emergency savings so that you have funds to tap if a significant repair pops up unexpectedly. Most people need at least three months’ worth of living expenses in an emergency fund, but as a homeowner, you should aim for six months’ worth of expenses or more.

3. Expect your property taxes to go up

Your property taxes are based on the assessed value of your home coupled with local tax rates. When you buy a new home, you’ll be advised of your current property tax liability — but don’t get too comfortable with that number.

Property taxes have a tendency to rise, even when home values drop. Back in 2000, localities across the U.S. collected an estimated $247 billion in property taxes, but by 2010, that number almost doubled to $476 billion despite the decline in home prices from the infamous housing bubble implosion.

Additionally, some localities require property reassessments at certain intervals (such as every year, every other year, or every three years). If your home is reassessed at a higher amount, you could see an instant hike in taxes.

To protect yourself, leave some wiggle room in your budget. This way, if you’re hit with a significant property tax increase from one year to the next, you won’t be scrambling as much to make those payments.

4. Don’t get caught off guard when big payments come due

Some people roll their homeowners’ insurance and property taxes into their mortgage payments via an escrow system. The way this works is that a lender will charge a set amount each month above your mortgage payment alone, put that excess money in an escrow account, and use it to pay your property taxes and homeowners’ insurance for you. But not all mortgages work this way. Many just have you make your exact mortgage payment and remain responsible for paying your homeowners’ insurance and property taxes on your own.

If you fall into the latter category, you’ll need to budget accordingly so you’re not caught off guard when these larger payments roll around.

The average U.S. household spends $2,127 on property taxes each year, but in many states, that number is much higher. Take New Jersey, for example, whose average annual property taxes exceed $7,000 and, in some counties, can easily top the $15,000 mark.

Most homeowners pay property taxes quarterly, and if yours are $4,000 a year, that’s an extra $1,000 check you’ll need to write every three months. Rather than scramble to come up with that money, be sure to budget $333 a month for property taxes. Along these lines, the average annual homeowners’ insurance premium in the U.S. is $952. If you’re required to make that payment all at once, you’ll need to set aside money each month in anticipation.

 

If you want to hate on the housing market recovery, there are certainly plenty of items to dwell on.

Ads for house-flipping seminars have returned to AM radio and late-night cable TV in many markets — So-called “liar loans” or “Alt-A mortgages” that played a big role in the housing crash are increasing in popularity. And, of course, there are the fears that a low-interest-rate environment has already prompted everyone to refinance and has artificially created demand for housing thanks to cheap access to mortgages.

But while plenty of specialists are sounding the alarm bells, its said to be the panic over another housing crisis is a lot of nonsense.

Particularly if you’re an investor, there has never been a better time in history to get into real estate.

The scars from the Great Recession are real, and many can’t shake the fear and financial pain caused by the housing crisis. But regency bias also caused many small-time investors to dump stocks at the very bottom of the market, and caused many to miss out on the 200% gains in the recovery.

If you think we are in the middle of another housing bubble and that real-estate investing is only a sucker’s game, you may simply be letting the past influence your perceptions despite continued signs of strength.

And considering the investment potential — particularly in the rental market — you may want to take another look.

This is a healthy market, not a bubble

For starters, the real estate environment is generally  quite good.

By any measure prices continue to rise. Median home prices shot past pre-recession levels to new all-time highs. National home prices were up 5.7% in June, according to CoreLogic — an even faster rate of appreciation than the 5.3% rate in May and the 5.4% rate in April. New home sales have powered to a seven-year high on strong demand.

Critics will warn that rising prices and rising demand can indicate a bubble the same way they did in 2005However, the housing market is much healthier than during the previous run-up. In fact, Realtor.com has created a “bubble index” to show how different conditions are from 10 years ago, using metrics like the prevalence of house-flipping, price-to-income ratios and the share of buyers using mortgage financing. Even in high-growth markets like San Francisco, we aren’t seeing behavior that mirrors the frenzy of the mid-aughts. Therefore, if this was a bubble, we would see a supply glut instead of a lack of inventory actually acting as a headwind to sales.

Another important data point: Foreclosures are at the lowest level since at least 2000, so it’s not like people are burying themselves in big debts they can’t pay just to buy a home.

Lastly, consider how many markets like Las Vegas or major Florida metros like Miami, Tampa and Orlando have real estate values that still are below pre-crash levels despite the broad improvement nationwide. This proves that areas that were ground zero for ridiculous enthusiasm have not gone back to their old ways, but have in fact been right-sized and are staying there.

Whether it’s stricter lending standards, a shift in attitudes among borrowers or simply the nation getting wiser about the risks of real estate, we’re hardly seeing irresponsible buying in 2016. What we are seeing is a healthy housing market that continues to steadily and organically appreciate.

And given that so many traditional asset classes are facing headwinds, it’s worth taking a serious look at real estate both as a way to find new opportunities and to hedge your bets in a challenging mar

According to the West Penn Multi-List, Inc. and its residential real estate report, all major sales indicators were on the rise for the first half of 2016.

“The first half of this year has brought good news for residential real estate, and we’re optimistic for the second half of 2016,” said Ron Croushore, current president of West Penn Multi-List, Inc., and owner and CEO of Berkshire Hathaway Home Services The Preferred Realty.

When comparing January-June 2016 with the same time period in 2015:

• Closed sales increased 5.80 percent
• Closed sales volume increased 5.62 percent
• Average sales price increased 0.31 percent
• New listings increased 3.32 percent

“We continue to experience favorable market conditions for both sellers and buyers this summer,” said Croushore. “Interest rates remain low and homes are selling quickly due to low inventory levels.”

I am a millennial with student loans which makes saving for a down payment on a house difficult. I am currently renting and feel like I may be throwing my money down the drain when I could be building equity. Should I consider a low down payment option or put off buying a home until I can afford the recommend 20% down payment? -Zach Cain, 24

The decision to become a homeowner is likely to be the biggest financial commitment you’ll make, and many factors should be taken into account.

First, let’s tackle whether it makes sense to become a homeowner. Writing a monthly rent check can seem like throwing away money, but piling mortgage debt on top of student loans can create a long-term budget crunch.

“With student loan debt, your asset is your education and no one can take that anyway,” said Certified Financial Planner Travis Sollinger at Fort Pitt Capital Group. “But if you buy a house and you can’t afford the payments, they will take the house.”

Along with your credit score, your debt-to-income ratio is one of the most important numbers banks look at when issuing a loan. This number helps lenders determine your ability to repay.

To determine your ratio, add up all your monthly debts, including car, student loan and credit card expenses and the potential mortgage payment, and divide it by your gross monthly income. In order for a mortgage to be backed by the government, this number can’t be higher than 43%.

Low mortgage rates and high rents make buying an attractive option, but you should be ready to put some roots down. If you’re planning to stay in a home for at least two years, buying is more financially advantageous than renting in 70% of housing markets, according to a recent report from Zillow.

Now let’s weigh your down payment options.

Down payment size impacts the total cost of a loan. The bigger the down payment means you’re borrowing less from the bank, which lowers monthly payments. It can also lower your loan’s interest rate, reducing how much you’ll pay in interest over the life of the mortgage. However, the Federal Housing Administration backs mortgages that require as little as 3.5% down.

Putting less down will likely lead to higher interest rates on the loan, but with interest rates still so low, now could be the time to pounce. “Given the current environment, it’s not going to be that big of a difference,” said Sollinger. “It adds up over 30 years, but it’s better than continuing to rent for the next five to 10 years. If you itemize, the cost of that money is pretty darn cheap.”

When figuring out how much money to put down, don’t wipe out your savings account, advised Bill Van Sant, certified financial planner at Girard Partners. It’s a good idea to keep a cushion to cover things like closing costs, moving expenses, home insurance and furniture shopping.

But the decision to buy a home isn’t all about money. Becoming a homeowner comes with a lot of responsibilities: You’re in charge when the dishwasher stops working, the basement floods, or there’s an uninvited critter house guest. Make sure you’re willing to handle those responsibilities as well.

 

Mortgage rates are dropping.

In December, when the Federal Reserve raised rates for the first time in nearly a decade, many would-be homebuyers assumed it meant the beginning of the end for record-low mortgage rates.

“This is evidence that the Federal Reserve isn’t the sole determinant of U.S. mortgage rates,” said Mark Hamrick, senior economic analyst at Bankrate.

The 30-year mortgage rate fell to 3.79%, the fourth straight week of declines, according to Freddie Mac. A year ago, the rate averaged 3.66%.

The rate on a 15-year fixed mortgage also dropped to 3.07%.

On Wednesday, following weeks of volatility on Wall Street and global markets, the central bank left the benchmark rate unchanged. The rate-setting committee will meet again in March.

While the central bank doesn’t control mortgage rates, a higher Federal Funds rate makes it more expensive for banks to borrow money, which can ultimately be passed on to consumers taking out loans.

Lower interest rates are good news for homebuyers looking to get into the market. “This is one of the remarkable positive influences we are seeing being exerted in the housing market right now,” said Hamrick.

But tight inventory has helped push home prices higher, creating an affordability problem in many markets throughout the country.

In response to the lower rates, mortgage applications ticked up 8.8% last week.

While lower rates help both buyers and sellers, it’s unclear how long they will last.

“The future direction of rates remains to be seen, and will be based on the health of the economy,” said Hamrick.

Selling a home can be a stressful experience.

If you expect to put your home on the market at some point in 2016, here are some key factors for you to keep in mind before you address issues and concerns to make the best possible deal.

It’s a seller’s market …

Many homeowners remember the fallout that the housing bust had on real-estate prices. Even though most investors think of the financial crisis as having hit its peak in 2008 and early 2009, it took three more years for home prices to hit bottom.

Yet since early 2012, prices have climbed higher, and the Case-Shiller National Home Price Index is coming within spitting distance of matching its highs from 2006 and 2007.

Where you live is a key factor in determining just how much of a seller’s market you can expect. Hot markets like San Francisco have seen some housing-boom-era practices return to favor, with many reports of bidding wars that result in offers well above the asking price.

By contrast, areas where economic prospects are less favorable have never fully recovered from the housing bust. The more lucrative a region’s economic future appears to be, the easier you can expect it to be to sell a home.

… but mortgages could get more expensive

One key factor in how much sellers receive for their homes is how much buyers can afford. Low mortgage rates have helped fuel price increases in recent years.

But some now fear that with the Federal Reserve having begun a new cycle of rate increases, a move higher for mortgage rates could make homes less affordable.

So far, the tiny quarter-point boost that the Fed made in mid-December hasn’t pushed mortgage rates appreciably higher. Historically, though, tightening has generally led to increased rates on mortgage loans. Sellers need to be prepared for greater difficulty for prospective buyers trying to get financing.

Tax benefits still favor home sales

The biggest tax break for ordinary taxpayers is still the exclusion on capital gains for the sale of a personal residence. Single taxpayers can exclude up to $250,000 in gains from the sale of a home from tax, and joint filers get a double-sized exclusion of $500,000.

To qualify, you have to meet a couple of tests. First, the property in question has to be your main home. In addition, to get the full exclusion, you have to have lived in the home for at least 24 months in the past five years.

You can’t have claimed a home-sale exclusion on tax returns for the previous two years. In some cases, partial exclusions are available, but getting specific tax advice from your accountant or tax professional is essential to make sure you’re aware of all the tax implications of a home sale.

Get help at the right price

Most homeowners use a real-estate agent to help market and sell their homes. Historically, the typical 6% commission on home sales was sacrosanct, but some agents have increasingly been willing to negotiate lower commissions for their services.

Flat-fee brokerages have also popped up, offering a fixed cost that sellers can count on that’s often lower than the percentage-based commission would be.

The issue raises a huge debate in the real-estate community, with full-service agents arguing that they fully earn their commissions by bringing in more potential buyers and eventually getting higher sale prices.

Selling a home is a monumental event, and it can introduce a number of complicated financial considerations. Being aware of those considerations and making a plan to deal with them will help the selling process go a lot more smoothly.

 

‘Tis the season — not just for exchanging gifts and holding festive get-togethers, but also for scoring a great deal on a new home.

In the market for a new home? Here are four reasons to add real estate shopping to your December to-do list. 

Bargain prices

Did you know that, historically, home prices are lower in December than in any other month?

As for the overall housing picture, if you’re not yet in the market, you’ll like this news: While home prices are continuing to rise, it’s happening at a much slower pace.

According to a recent report from Zillow, U.S. home values are currently up 6.4 percent year-over-year and have been slowing for nearly two years. Next year home values are expected to grow at 3 percent — roughly half their current pace.  These changing dynamics, and a shift toward healthy stabilization, put more power in the hands of buyers.

Low mortgage rates    

What’s driving affordability? Low mortgage rates. Currently hovering in the 4 percent range, rates are projected to edge up to 5 percent by the end of 2016, according to Zillow Chief Economist, Stan Humphries.

To put this in perspective, did you know that if rates go up by just one percentage point, your purchasing power is reduced by a whopping 11 percent? Find out how much waiting to buy could cost you.

Motivated sellers

If sellers are listing their home for sale this time of year, this likely means they’re serious about shedding the weight of their residences.

Regardless of why that is – perhaps they’ve recently gotten divorced, have to relocate for a new job opportunity, or are under some other personal pressure – this puts you, the buyer, in a much better position to negotiate and ultimately cut a deal, particularly since competition is minimal this time of year.

Tax savings

At the end of the year, everyone is looking for ways to lower their tax bill. And closing on your new home before Dec. 31st is one way to get some breaks.

After all, you can deduct home purchase costs, including mortgage interest, property taxes and points — while you build equity and save yourself a significant amount of money.

Southern California’s housing market maintained its brisk pace in September with both sales and prices rising from levels a year ago, a market tracker said Monday.

Last month, sales of new and previously owned houses and condominiums rose 13 percent from a year ago to 21,350 properties, according to CoreLogic. That is the most sales for the month of September in six years, the company said.

Sales have now risen on a year-over-year basis for eight consecutive months. It’s is the longest stretch of year-over-year gains since late 2012 through early 2013, CoreLogic said.

The median price in the six-county region increased 6 percent to $435,000 over the previous year, the company said.

In San Bernardino County, sales rose 7 percent to 2,540 and the median price increased 13 percent to $268,000. That was the biggest percentage gain in the region.

In Los Angeles County, the region’s biggest market, sales increased 16 percent to 7,448, and the median price gained 5 percent to $490,000, CoreLogic said.

San Bernardino is the most affordable market in the region.

On a month-to-month basis, sales and prices were either flat or down slightly.

Between August and September, sales in the region slipped 0.4 percent and the median price fell 1 percent.

In Los Angeles County, sales rose 2 percent, and the median price fell 2 percent between August and September. In San Bernardino County, sales fell 2 percent and the median price dipped 1 percent.

“On the home price front, the more affordable markets scoured by many first-time buyers have posted some of the highest year-over-year price gains in recent months, despite an easing of competition from investors,” CoreLogic analyst Andrew LePage said.

Here are some other key figures:

• Sales of homes costing $500,000 or more accounted for 39 percent of all sales last month, down from 40.5 percent in August and up from 37 percent in September 2014, CoreLogic said.

• Sales of homes priced below $500,000 rose 8 percent year-over-year while sales above that price point increased 20 percent.

• Sales of homes costing $1 million or more rose 19.5 percent from a year earlier.

• Sales of distressed properties continue to play a diminished role in the market.

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• Last month’s sales of foreclosed properties accounted for a 4 percent market share, unchanged from August and September 2014.

• Short sales, transactions where the purchase price was less than the balance of the prior loan, accounted for a 3 percent market share last month, unchanged from August and down from 4 percent in September 2014.

• Cash buyers accounted for 21 percent of sales last month, the lowest percentage for any month since November 2008 when it was 20 percent.

The biggest challenge for the market remains scant inventory and it now appears that is what drove a 13 percent drop in sales across the region between July and August, LePage said.

“I don’t see evidence of a huge increase in inventory. And that’s evidence that the rather pronounced sales decrease between July and August is probably an inventory response,” he said. “If it were a trend (of a sales decline) September would have come in weaker.”

It just got a little easier to navigate the complicated mortgage process.

New disclosure rules went into effect in the mortgage world Saturday that require lenders to provide home buyers two new forms that clearly detail their loan terms.

“For consumers, it’s going to be viewed as an improvement in what can be a somewhat scary and intimidating process in the biggest investment of their life,” said David Stevens, CEO of the Mortgage Bankers Association.

The rule, formally known as the TILA-RESPA Integrated Disclosure rule, reduces what used to be four forms from two different government agencies to two forms: the Loan Estimate and Closing Disclosure.

Here’s what buyers can expect:

Comparing different loans

Lenders have to provide potential home buyers a Loan Estimate form within three days of a submitted application. The three-page form details the terms of a potential loan including: amount, interest rate and whether the figures can change after closing. Clearly breaking out these figures should make it easier to compare loans from different lenders to find the best rate and terms. Be sure to pay attention to whether the interest rate is fixed or adjustable and any potential future penalties you could face. The form will also breakdown estimated closing costs.

What you saw is what you bring to closing

Lenders must provide the Closing Disclosure form three days before the closing date to allow the buyer to make sure the loan terms haven’t changed. Is there away I can incorporate this into a blog. I want the pictures displayed along with the words. Let me know. Every time I paste it in the section it does not appear.   The first page of the Closing Disclosure mimics the Loan Estimate form to make it easier to verify that the loan amount, interest rates, monthly payments and other costs haven’t changed since that initial estimate.   “Make sure that first table [on the forms] match,” said John Henson, chief compliance officer at Lending Tree. “You are stuck with that for the life of the loan. Make sure you can afford what you sign up for.” If any amounts have changed significantly, be sure to ask why.   Henson added that buyers should also pay close attention to the monthly payment figures that include mortgage insurance and estimated escrow costs along with the cash expected at close.   With the disclosure, “You don’t run into the situation where a buyer doesn’t know how much money to bring,” he said.

No more ‘Parking lot’ deals

Because borrowers must have the Closing Disclosure three days before closing, the deal can’t change at the last minute.   This requirement could take some time for lenders to adjust to and could delay some closings. “The industry is used to getting things done at the last minute,” said Stevens. That means any inspections, repairs and contingencies need to be taken care of earlier in the process. “There will be buyers and sellers that will be shocked they can’t make an adjustment to their contract three days before their settlement,” said Bob Davis, executive vice president at American Bankers Association. “Some deals will likely be delayed due to the re-disclosure rules.”

Americans went shopping for homes in August.

New home sales for single families totaled 552,000 homes last month. That’s the best monthly figure since February 2008 and an encouraging sign of the housing market’s momentum.

It was nearly a 6% increase from July, which was also revised up, according to the Census Bureau.

Still, the figure is a far cry from the historic average: the average monthly number of new home sales over the last 30 years is 706,000 according to Peter Boockvar, chief market strategist at the Lindsey Group.

“Today’s figure is encouraging but we’ve got a LONG way to go,” Boockvar wrote in a note to clients.

Some economists believe there could be an uptick in home buying as prospective home owners try to lock in a low mortgage rate before the Federal Reserve raises interest rates.

The average rate on a 30-year fixed mortgage in August was 3.9%, very low on a historical basis. A decade ago the rate was about 5.8% and 20 years ago it was 7.8%. When the Fed raises rates, the expectation is that rates on mortgages will gradually move up too.

The central bank is now expected to raise rates in either October or December.