It takes more than PITI to own a home!

Most homeowners and prospective buyers are familiar with the term PITI.  It is a financial term that stands for Principal, Interest, Taxes and Insurance.  Your PITI is a critical number for a lender to determine how much your monthly expenses will be when you purchase a home.

The other day I was talking to Marty Bhatia, of Om Homes.  He has been developing green residential projects in Chicago for eight years and always has something insightful to share.  This time he was talking about an even more important number for homeowners he has come up with:  PITIUM.  It's a mouthful.  But I definitely agree that it's something that every homeowner should pay more attention to.

So what is PITIUM?

The first part is PITI.  But that's just the bank's perspective on owning a home. The rest of the picture is UM:  Utilities and Maintenance - the operating costs associated with owning a home.  (Condo owners have PITIUAM, which includes Assessments.)

Green homes definitely have an edge when it comes to operating costs. In my opinion, a true green home is one that is well planned.  It is one that focuses on conserving water and energy, and maintains a healthy environment inside.  Planning like this inevitably leads to significantly lower utility bills.  And, many green technologies lead to lower maintenance requirements.  For example, skylights or solar tubes means less light bulbs to burn out and replace.  And a tankless water heater is designed to be repaired using individual parts like a car engine, rather than the whole thing being thrown out like a traditional tank water heater.

One simple step homeowners can take at any time to manage utilities and maintenance is to purchase ENERGY STAR products.  People often associate ENERGY STAR with the yellow tags on appliances that calculate estimated energy savings.  But consumers overlook the point that these products also have to meet strict quality standards to be called ENERGY STAR.  They are built to outlast other products which lowers maintenance costs.  ENERGY STAR products range from light bulbs to humidifiersso be sure to ask for them!

When buying a new home, do your own homework in addition to what the bank requires.  Don't be afraid to compare features as well as utility bills of the homes you are considering.  And, be sure to carefully consider dates and ages of equipment and materials of the home as well as the results of any home inspection.  If maintenance may be an issue, be sure to make a plan to fund upgrades as soon as they are needed.

Do yourself a favor and shop for homes beyond PITI so you can make a choice based on how much you'll spend to operate it!