New-York tribune., 1922-04-09
By E. A. Hungerford
Former Publicity Director National
Thrift Week Committee

Former Publicity Director National
Thrift Week Committee
TIE greatest industry in the world
IS the home. And the greatest indus
trial manager therein is the woman
who conducts its affairs on business
lin basis. similar to the system always
fond successful in modern, big in
duStry and government, for that mat
ter~~the budget system
OF the many problems which the
prospective home owner is called Upon
to solve. undoubtedly the most difficult
involves the questions of financing
As used herein. the term Financing"
involves not only methods OF providing
sufficient money to carry out the build
ing project. or the purchase of house
already built, but some provision to
safeguard the investment. Here the
use OF the budget system of cxpend-
lures should be put into play; before
and after the home is acquired.
Home Buying Great Mystery
The financial problems involved in
home owning are deeply mysterious to
the average individual, and just because
these problems are not understood nor
foreseen many men and women are
often numbered for years among the
tenants OF some profiteering landlord,
when all the time that man or woman
is able financially to own home.
Like many other things. costs and
other details of home owning and
building, which seem difficult to un-
derstand. become as plain as day when
one has given them even small
amount of study.
1t may come as something of q
shock to learn that owning q home in
wolves cost, even though the house and
lot are paid for. There are carrying
or overhead" costs. 1t behooves the
wise prospective home owner to look
into them carefully and to find out
exactly what he or she will be obliged
to pay out. annually or monthly, the
price of living in the little house Of
dreams" when once it is ready for oc-
cupancy. Some times such costs are
referred TO as Owners rent"
In the family, both man and wo-
man, husband and wife, should budget
this prospective annual expenditure
or Owners rent" Thus, by analyzing
carefully the cost of home owning. the
temptation to take on too great fl
nancial responsibility may be over
como by cold figures to the ultimate
benefit of the prospective owner.
After the home is built or purchased,
the success of the annual budget
figured on the famly's earning power,
Is UP to the woman. She must con-
duct the business affairs of the house
so that the expenses connected with
home ownership are kept within the es-
timated annual total, including pro-
vision for so-caIled Owners rent"
Costs OF Ownership
Following are the important items
Of recurring cost which take the place
Of rent when a homo is purchased.
Each item is explained fully in later
paragraphs;
G} Interest on first mortgage. -
~ interest on second mortgage
tS Taxes: city. county, town or
~ schooi. .....................
t4} Water rent or tax.......4....
to) maintenance; painting, repairs
{s> Interest on Investment .sa....s
tt| insurance.. saaa~s4ss q -------
Total annual cost.
Though not listed, the item of de-
probation should be considered, The
average home owner does not consider
this item, but it is q fact that the
structural depreciation on any home.
due to wear and tear, IS from 8 per
cent TO per cent year. In any
growing community however, particu-
lnrly in and near New York, this is
offset by an annual increase in the
value of the land on which the house
is built
In order to determine fairly what
occupancy of the proposed dwelling
will cost monthly, after determining
cost of land and building. tho pros.
pective owner must decide on approxi-
mateiy what mortgage will be carried.
The items in the table as given can
then be estimated or budgeted fairly
in the following order:
ITEM l. INTEREST ON FIRST
MORTGAGE for one year at prevail
ing rate.
ITEM 2-INTEREsT ON SECOND
MORTGAGE, similarly.
ITEM STAKES. For the purpose
of taxation the local tax office ap-
one-half its value, although this factor
varies In different localities. By in
quiry as to nearby assessed valua-
tions or appraisal1 for taxation a fair
ly close estimate may be made as to
what the tax authorities will say
property is worth for taxation pur-
poses. This amount is called the "as-
sessed valuation" of the property and
is usually, though not alawys. less
than its real value. Local tax rates
are established periodically and taxes
are figured by applying the rate to the
assessed valuation. Thus, an $4,000
house tcost of land and buildine) NAV
have an assessed valuation of $4,000.
The tax rate may be SITS. which
means $1.7S for each 500 of the as
sessed valuation. In this case the an
nual tax bill would be $50. usually
= payable in advance in two installments
\six months apart
ITEM 4-WATER RENT OR TAX
rs not large amount II is an an
nual charge to cover expenses of water
supply and is based on the number of
water outlets of various sizes in the
house, easily determined by inquiry.
ITEM MAINTENANCE is the cost
Of upkeep, including painting and all
repairs. This amount is generally
found to average annually approxi-
mateiy l to Il per cent of the cost of
the house and is higher in frame con-
structlon than in masonry.
ITEM 6-INTEREST ON INVEST
MENT'is limited to the amount of cash
actually invested in the house. This is
equity. While this is not direct pay
ment it should be figured at the pres
ent rate that an equal amount of money
would be earning for the owner, usually