Cost of Homeownership

If you’re one of the many looking to live the American Dream by owning your own home, here are some things that go into owning a home. It’s never as simple as the mortgage payment unfortunately, but if you prepare yourself, it could be worth the effort.

Inspection and Appraisal Fees
A home inspection and appraisal are required before purchasing a home. There may be other additional inspections required such as checking for pests. Buyers are required to pay for this and it also serves as protection from buying a home with hidden issues or paying too much for a home that could need major work done.

Closing Costs
On occasion buyers can negotiate splitting the closing cost with a seller, but buyers should be prepared regardless to pay anywhere from 2% to 4% of the mortgage balance.

Taxes
Homeowners need to pay property taxes yearly. Depending on the state you live in, the monthly mortgage can easily escalate with the tax rate. Property taxes can also fluctuate even though you have a fixed-rate home loan.

Insurance
Lenders will require you to carry home insurance and just like auto insurance, it can vary depending on several factors including construction materials and location. Also depending on where you live, earthquake or flood insurance may have to be purchased separately as most basic home insurances may not cover for that.

HOA and Condo Fees
Fees are also usually required for living within a homeowners’ association or condominium. These are usually set by the HOA and can also rise annualy to pay for projects done by the association to maintain the community.

Moving Costs
Even if you’re paying friends to help, there still is a cost associated with moving your possessions. Rental trucks, accessories, and you may also be required to make deposits again on starting up utilities at the new home.

Utility Bills
Some apartments take care of some utilities, but when you own your own home, now you are in charge of everything. Not to mention as the home is typically bigger than an apartment, the usage tends to go up as well with a larger dwelling.

Lawn Care
Whether you do this yourself or hire a gardner, you will have to pay for your own equipment or someone to work for you. The larger the yards the more costly this will be in both time and money.

Maintenance
Interior home maintenance costs both time and money. While you may be able to change your furnace filters, clean your gutters and keep your appliances running smoothly yourself, you may also need to hire a contractor to clean and inspect your chimney and to keep your heating and air conditioning system in top shape.

Repairs
One of the mostly expensive parts of being a homeowner is having to shell out for unexpected repairs or replacements. Roofs, water heaters, furnaces, AC units, septic tanks to name a few can go without any notice. These things are not cheap to get replaced either, so being a homeowner requires you to set aside money for these emergencies.

The Bottom Line
While the list may seem like a lot of cons against buying a house, this is merely to prepare a prospective homeowner and minimize the surprises when the first payments are due. Buying a home while budgeting for the maintenance and taxes can ensure you will not be in a strapped position forced to live from paycheck to paycheck.

Think we’ve missed something? Let other readers know of other hidden costs or expenses with owning a home by commenting below!