# Cut your Closing Costs

### What will my Closing Costs be? - click here.

Accepted
Offer -- What next?

## Inspection

Home inspection is a major step in the buying process. century21.com offers helpful information on potential problems that can be discovered during this period.

## Insurance

Homeowners insurance protects you against natural disasters and catastrophic events. Find more related information at century21.com

## Timeline and Paperwork

In the home buying process, the closing meeting is where ownership of the home is officially transferred to you. Know what to expect when you close on your new home.

## Moving In

Planning to move to your new home? Our home moving checklist can help you make moving less stressful and more successful.

# Buyer Advice

## Add Commuting Costs to Mortgage/Rent

Here is some practical advice that helps explain why real estate is all about "Location, Location, Location."

Remember to factor in the costs in time, fuel, auto maintenance and the risk of driving when you are deciding what kind of commute you are willing to accept. Many people buy or rent without considering this carefully and they often regret their decision after it is too late. Don't let that happen to you.

1. Ask yourself what you would pay someone to give you an extra 30 minutes every morning and 30 min every afternoon. If you have a job that pays you $40/hr then your time is probably worth $40/hr. Divide your cost per hour by the average speed you expect to drive on your commute for your average cost per mile.

2. Next ask yourself what is the risk of having an accident per minute of driving time. There are many ways to do this. One easy way is to divide your monthly car insurance payment by the number of miles you drive per month. Example: You pay $200/month for car insurance and you drive 500 miles per month. Your risk cost per mile is $0.40 ($200/500mi). Another method would be to estimate the probability of having an accident for each mile you drive. Then estimate what the accident would cost in dollars. Divide the cost of an accident by the probability that you will have an accident in any given mile to get a cost per mile for your risk. This is the method used in the worksheet below.

3. Factor in the cost of maintenance. Just take your total auto purchase and car care expenses and divide by the number of miles you drive. So if you have a car that cost you $20k and you have driven it 60,000 miles you have been spending $0.33 per mile to own your car. If you have had a brake repair that cost you $1,000 and twenty oil changes at $30 each you can add $1,600 to the total cost of your car and $0.026 to the cost of driving one mile for a total of $0.356 per mile.

4. Now count the obvious cost of fuel. Multiply the average cost of a gallon of fuel and divide by the efficiency rating of your car. If you get 20 mpg and gas costs $3.50 per gallon then you spend about $0.18 per mile you drive.

5. Add these costs to get a total per mile cost of driving one mile. Multiply this by your commute miles driven per month and add this amount to your monthly rent to find the cost of housing and commuting combined.

Table 1: click the table above for a larger view

To make calculating your commute costs easy I have created an excel spreadsheet that will compute them for you. Enter the variables described above in the yellow blocks and the spreadsheet will automatically calculate your commuting costs for various distances from your work place.

Excel Interactive table

I'm a big fan of living close to where I work. If you factor in the cost of commuting into your decision where to buy or rent you will begin to see why busy people put a premium on living close to their place of work.

If you would like me to assist you in understanding these costs please feel free to call me. Realtor® Roger - 608-331-0000

The True Cost of Commuting