8 Hidden Costs of Home Ownership
Owning a home has always been a part of the American dream. It’s something that we fantasize about when we’re young, something we scrimp and save for, and quite frankly, something we end up paying for, for the rest of our lives. Aside from the home mortgage, it seems owning a home is more expensive than we thought.
Leaky pipes and infestations are sudden home expenses to watch out for, and maintaining and repairing can prove to be not only a daunting task, but also a very expensive one. There are also other expenses that suddenly pop up, things that we don’t even think.
In order to prepare yourself for the potential expenses in home ownership, below are some of the hidden costs of having a home.
1 . Property Tax
Taxes have always been a pain in the butt, and there’s no exception when it comes to owning a home. People who have a mortgage on their home usually have their property taxes in escrow. This allows your to pay your mortgage and set aside money for property taxes. But, if you do not escrow your taxes. You can prepare yourself by checking the annual property tax and dividing it by 12 so you can add it to your estimated monthly expenses. The information can usually be found in an MLS listing. Also, remember that taxes are most likely to keep going up every year so make sure you have an allowance to your budget if this happens.
It costs a whole lot more to insure a house as compared to a 1-bedroom apartment. So even if you paid for renter’s insurance, you better be prepared to increase your insurance budget. One thing to consider is that an older home may cost more to insure because the heating, electric, and plumbing are older, thus more prone to damage. Insurance companies can also check your credit record and raise their rates based on your credit score.
3. Home Owners Association (HOA) Fees
Houses that are in a subdivision may have to deal with HOA and their fees. This is also applicable to condominium units. These fees are a charge to use and maintain the shared public areas such as the community clubhouse, play grounds, pool, and grounds keeping.
The moment we purchase a new house, the next thing we think about is what furniture would look great in it, what interior decorating, what appliances etc. Of course since it is YOUR house, you would like it to reflect your style and taste especially when the guests arrive. Besides, who wants to live in a ratty looking home? And there goes the paved walkway, the landscaping, the new patio, and the shutters. All pretty expensive.
We all know how detrimental to our budget major repairs are, so instead of predisposing ourselves to the danger of heavy repairs, it’s important to maintain the stability of all areas of the home. Of course, this includes cleaning the gutters, sealing the doors, fixing plumbing leaks, reinforcing the roof, and many more.
You may have come across an apartment where heating and water was included in the monthly rent. This time, you will have to shoulder these utilities. There can be nothing more expensive than electric and or gas bills, and the cost of energy is continuing to rise day by day. In order to prepare yourself on the cost of utilities, request the previous home owner to show you a copy of their utility bills for the past 12 months so you can get an accurate picture of how much you expect to spend through all the four seasons.
Repairs can make a new home owner long for the good old days when you used to rent. Each major system in the home such as plumbing, electric, heating, roofing, etc. are crucial to making a functional home. Also, everything has to be kept in good working order to protect your investment, and keep your life running smoothly. Remember, there’s no landlord to call in times of emergencies.
From repairing the deck rails to installing a burglar alarm system, adding motion-detector lights or adding more lighting to your exterior, those extra security measures will certainly empty your pockets. Despite these hidden costs, there are still many advantages towards owning your own home.
Just make sure that before you go into a home mortgage, really do your due diligence in terms of your budget and how much you can realistically afford. Also, take into account your soon growing family and if you plan to move to a larger home when the time comes.