Homeownership is an exciting milestone for many individuals and families. Owning a home comes with many benefits, but is also a significant financial responsibility. While the cost of a mortgage payment is a primary concern for most people, there are other hidden costs of homeownership that new and prospective buyers may not be aware of. In this article, we’ll explore some of the most common hidden costs of homeownership and how you can prepare for them.
1. Property Taxes
Property taxes are a significant expense that homeowners need to budget for, as they can vary depending on the location of the property. Many homeowners pay their property taxes through their mortgage payments, but it’s important to ensure that your property taxes are being paid correctly and on time. Make sure to check out the average property taxes for the areas you’re interested in owning a home before moving so you know you can afford them.
2. Home Maintenance and Repairs
When you own a home, you’re responsible for its maintenance and upkeep. This includes regular tasks like cleaning, landscaping, and changing air filters, as well as more significant repairs like roof replacement or HVAC system repairs. It’s essential to budget for these expenses and set aside money each month for maintenance and repairs. Having an emergency fund set aside is also a good idea. This helps you worry less about big maintenance costs that come out of nowhere, like replacing a water heater.
3. Homeowners Association Fees
If you live in a community with a homeowners association (HOA), you’ll likely have to pay monthly or yearly fees to cover the cost of community maintenance, such as landscaping, pool maintenance, or snow removal. These fees can vary widely depending on the community, so it’s important to research and budget for them before purchasing a home. HOAs can also have a lot of say over certain aesthetic choices, like your garden choices or what color you paint your house. Make sure you check to see if your prospective home is in an HOA neighborhood.
As a homeowner, you’re responsible for paying for all the utilities that keep your home running, including electricity, water, gas, and internet. These expenses can add up quickly, especially during months with extreme weather conditions. Consider budgeting for utilities by estimating the average cost of each utility and setting aside money each month to cover them.
5. Home Insurance
Home insurance is a critical expense that protects your investment in your home. It covers the cost of repairs or replacement in the event of damage or loss due to natural disasters, theft, or other unforeseen circumstances. The cost of home insurance can vary depending on the location of the property, age of the home, and the amount of coverage needed. It’s essential to research and budget for home insurance to ensure you have adequate coverage.
6. Closing Costs
When you purchase a home, you’ll have to pay closing costs, which can include fees for the loan application, appraisal, and inspection. These costs can add up quickly, so it’s important to budget for them before purchasing a home. You may be able to negotiate some of these costs with your lender or real estate agent, so be sure to ask about any available discounts or incentives.
7. Moving Expenses
Moving can be a significant expense, especially if you’re moving a long distance or have a lot of belongings. Forbes estimates an average moving cost of $1,400 and a range between $800 and $2,500. It’s even higher for long-distance moves. Some of the costs associated with moving include hiring a moving company, renting a moving truck, and purchasing packing supplies. To avoid unexpected expenses, consider creating a moving budget and getting quotes from multiple moving companies before making a decision.
8. Home Improvements
If you’re purchasing an older home, you might save on purchase price compared to newer homes. But you may also need to make some improvements or renovations to make it livable. Home improvements can include anything from replacing the carpet to remodeling the kitchen or fixing the foundation. It’s important to budget for these expenses and prioritize which improvements are most urgent.
9. Pest Control
Pest control is an often-overlooked expense of homeownership, but it’s essential to ensure the safety and health of your family. Pest control expenses can include regular treatments for common pests like ants and mice, as well as more significant treatments for termites or bed bugs. Consider setting aside money each month for pest control expenses to avoid any unexpected costs.
Owning a home comes with many hidden costs that can add up quickly. It’s important to plan ahead and budget for these expenses to avoid getting caught off guard. By understanding the true cost of homeownership, you can make informed decisions about your finances and ensure that you’re prepared for the responsibilities that come with owning a home. It can be challenging, but the benefits of homeownership can definitely be worth it.