Earn Your Leisure Podcast: Essential Home Buying Tips — Utilities, HOA, and Mortgage Insurance Explained

Hosted by Rashad Bilal and Troy Millings, the "Earn Your Leisure" podcast delves into the financial intricacies of home buying, providing listeners with valuable insights to navigate the complexities of purchasing a home. In this episode, released on February 4, 2025, the hosts are joined by a guest expert who offers comprehensive advice on utilities, homeowners association (HOA) fees, mortgage insurance, and homeowner’s insurance.

Understanding Utilities

The episode begins with a deep dive into the often-overlooked aspect of home buying: utilities. Rashad Bilal emphasizes the significance of understanding utility costs before committing to a property.

Guest Expert [03:00]: "If you're buying a 5,000 square foot home... it could really be thousands of dollars."

Key Points:

• Assessing Current Utility Bills: The guest expert advises prospective buyers to request statements of past utility expenses from current homeowners. This includes average costs for electricity and gas, which are controllable yet substantial expenses.

• Impact of Home Size: Transitioning from a smaller apartment to a larger home can exponentially increase utility bills. For instance, heating and cooling a significantly larger space can lead to costs that add up to thousands of dollars annually.

• Energy Efficiency: Implementing energy-efficient solutions can help mitigate high utility bills. Utilizing energy-efficient appliances and insulating properties can lead to long-term savings.

Navigating Homeowners Association (HOA) Fees

Troy Millings shifts the conversation to HOA fees, a prevalent consideration for those purchasing condos or townhouses.

Key Points:

• Inclusion of Services: HOA fees often cover utilities and amenities, which can offset some of the monthly expenses. For example, a condo in Atlanta includes both utilities and community amenities within a $1,400 monthly HOA fee.

• Maintenance Standards: HOAs enforce maintenance standards, ensuring uniform upkeep of exteriors and communal areas. This can enhance property value and appeal but comes at an additional cost.

• Value Appreciation: The guest expert underscores the importance of HOAs in maintaining property values, which is a primary reason for investing in real estate.

Guest Expert [04:30]: "What you get is the lowest rate, that has the highest coverage."

Home Maintenance and Protection

Maintaining a home involves ongoing costs, which the podcast addresses comprehensively.

Key Points:

• Routine Maintenance: Regular upkeep is essential to prevent costly repairs. This includes tasks like gutter cleaning, pressure washing exteriors, and annual HVAC system checks.

• Home Warranties: Investing in a home warranty can safeguard against unexpected repairs. For instance, replacing an HVAC system can cost upwards of $20,000, but a home warranty can alleviate such financial burdens through a manageable monthly fee.

• Annual Inspections: Conducting yearly home inspections helps identify and address issues before they escalate. This proactive approach ensures the longevity and integrity of the property.

Guest Expert [08:00]: "You have to advocate for yourself... you can actually shop around."

Mortgage Insurance Explained

Mortgage insurance is a critical component for buyers with less than a 20% down payment.

Key Points:

• Purpose of Mortgage Insurance: It protects the lender in the event of borrower default, not the homeowner's property itself.

• Requirement Conditions: Mortgage insurance is mandatory for down payments below 20%. Once the principal investment exceeds 20%, homeowners can request the removal of mortgage insurance.

• Irrelevance to Property Damage: It's crucial to understand that mortgage insurance does not cover property damages, such as those from fires or floods.

Guest Expert [09:35]: "Mortgage insurance covers the lender... because you don't have enough skin in the game."

Securing Homeowner’s Insurance

Proper homeowner’s insurance is vital for protecting one’s investment and ensuring comprehensive coverage.

Key Points:

• Comprehensive Coverage: Buyers should avoid opting for the cheapest insurance options, as inadequate coverage can lead to significant out-of-pocket expenses in case of damage.

• Reporting Upgrades: Any home improvements, such as kitchen renovations or the addition of valuable items, should be reported to the insurance provider to ensure adequate coverage.

• Annual Review: It's advisable to renegotiate insurance terms annually to secure the best rates and coverage levels.

Guest Expert [10:57]: "Cheaper is never better."

Effective Budgeting for Homeownership

Troy Millings highlights the importance of budgeting beyond the mortgage payment to encompass all associated costs of homeownership.

Key Points:

• Comprehensive Budgeting: Homeowners often exceed their initial budget when factoring in mortgage payments, utilities, taxes, insurance, and maintenance.

• Unexpected Expenses: Without a well-planned budget, unexpected expenses can strain finances, leading to potential financial stress.

Troy Millings [12:37]: "If your budget is like $2,500 and your mortgage is $2,000... your $2,000 mortgage actually turns into $4,500 a month that you actually end up spending."

Additional Considerations: School Taxes

Rashad Bilal brings attention to school taxes, an often-overlooked expense that can impact a homeowner’s budget.

Key Points:

• Location-Based Taxes: Living in desirable neighborhoods with excellent schools comes with higher school taxes, which are typically paid semi-annually or quarterly.

• Budget Integration: Buyers must incorporate these taxes into their overall budget to avoid financial surprises.

Rashad Bilal [13:18]: "When you want to move to that great neighborhood... they're paying school taxes, which is another amount that you're gonna have to put into that budget."

Final Advice on Insurance Policies

Before concluding, the guest expert offers additional advice on managing insurance policies effectively.

Key Points:

• Policy Advocacy: Homeowners should regularly review and advocate for their insurance policies to ensure they maintain optimal coverage at the best possible rates.

• Shopping Strategies: By comparing multiple insurance providers and communicating intent to find better rates, homeowners can secure more favorable terms.

Guest Expert [14:46]: "Get the lowest rate, that has the highest coverage and that will help with controlling your overhead expenses."

Conclusion

This episode of "Earn Your Leisure" provides a thorough exploration of the financial responsibilities that come with homeownership. From understanding and managing utilities to navigating HOA fees, securing appropriate insurance, and effective budgeting, Rashad Bilal and Troy Millings, along with their guest expert, equip listeners with the knowledge needed to make informed and financially sound decisions when purchasing a home.

For more insights into personal finance, entrepreneurship, and the intersection of business with pop culture, tune into "Earn Your Leisure" on your preferred podcast platform.