Besides the obvious expense of the monthly mortgage payment, what else could there really be when it comes to owning a home? Well actually, there are a LOT of expenses! Many first time home buyers are not aware of all the different costs that homeowners incur. If you are buying your first home, make sure you do research and are aware of exactly what it will take to own a home. Below, we have listed 10 expenses that first time home buyers often overlook or forget about completely.
Typically, property taxes are rolled into the mortgage payment or set aside in escrow. Property taxes are generally in the range of 1% of the purchase price but depending on where you live, it could be much less or much higher.
- Homeowners’ insurance
Like property taxes, the homeowners’ insurance is normally rolled into the mortgage payment or set aside in an escrow account. If this is your first time buying insurance, keep in mind that many companies will give you discounts if you bundle your auto and homeowners’ insurance together. Check out our Preferred Providers for the contact information of a few of our trusted insurance agents.
- Hazard insurance
Hazard insurance is slightly different than homeowners’ insurance. Hazard insurance covers natural disasters like floods and earthquakes. If you are in an area prone to floods, you will sometimes be required to have flood insurance, and same goes for earthquakes.
- Homeowner’s Association Fees
If you are buying a condo, then you will most likely have to pay a condominium association fee. If you are buying a house, then it just depends on the location and the subdivision. These are sometimes paid monthly and sometimes paid annually.
If you have rented your whole life, then you are probably used to paying gas, electric, and maybe water. When you own a home, make sure to account for the “extras” such as sewer and trash. Also keep in mind that you will most likely be paying for cable and internet service each month as well, but unlike the other utilities, cable and internet are optional and you can decide whether you want those or not.
- Big-ticket renovations and repairs
You will need to budget for large repairs. For example, the roof generally has to be replaced every 15-25 years. Some of these items you will expect to happen, but sometimes things break suddenly, such as your HVAC or water heater. Big items like these can cost in the tens of thousands of dollars, so definitely do not forget about this expense of homeownership.
- Routine maintenance
Not only will you need to set aside money for large repairs, but you will need a small savings account for routine maintenance. This category will include things like faucet leaks, clogged drains, broken light bulbs, replacing a cracked tile, and so forth. Prepare to pay $50-$200 per month in small ticket items such as these.
If you have a pool or hot tub, be prepared for some large bills. Pools in particular require yearly maintenance and you will have to replace the liner every 10 years or so. Also, unless you live in a condo, you will have a good amount of yard work. If you do not want to do any yard work yourself, then you will have to hire someone to mow the lawn, rake the leaves, trim the trees and bushes, shovel the snow, and clean the gutters.
- Moving expenses
If you are moving to a different state or from one house to another, then you will likely have to pay a moving company to help you out, or at the very least, rent a U-Haul truck so you can move your large furniture.
- New furnishings
First time homeowners or people who are upgrading to a larger home often forget about how much space they are about to have. Yes, you bought a house, but you won’t get very far if it’s completely empty. If you are on your own for the first time, you likely don’t have much furniture or décor of your own yet. You can ask friends and family for donations, but you will probably have to spend some of your own money on furniture and/or appliances.
So now you know: the mortgage payment is only one small part of the cost of homeownership. Make sure you really do your research and that you really CAN afford a home before you make an offer. Have additional questions? We want to help! Contact us today.