Blog
Surprising Hidden Cost of Owning a House
Before taking the plunge into home ownership, make sure you know how deep the water is. Consider the six hidden costs of owning a home.
- Property Taxes. If you’re renting, there can be fewer payments. It’s not uncommon for rent to include heat and water and sewer utilities. With homeownership, there are more payments, including property taxes. Often, the monthly mortgage payment will include 1/12 of the property taxes as a tax escrow. This way, the number of payments is reduced, but your obligation and expense is still there.
- Home Insurance. Insurance on homes has skyrocketed in recent years owing to unusual storm activity and increasing building and repair costs. A recent article at Realtor.com indicated the number of mortgage holders where taxes and insurance make up more than half of the mortgage payments has doubled since 2014.
- Mortgage Insurance. Did you pay less than 20% down payment for your house loan? If so, you’re going to owe mortgage insurance.
- This is a huge wildcard. Even new construction can have unexpected repairs. Many new homeowners underestimate the costs of repairs and remodeling. Some experts advise budgeting over $6,000 annually for repairs and improvements. Others suggest setting aside 5% of income.
- HOA fees. These used to be the exclusive territory of condominiums, but increasingly, even single-family home subdivisions have homeowner association fees.
- Even if you were paying the utilities when you are renting, the utilities may be much more once you’re an owner. If you lived in an apartment building, there were more shared warm walls. If you bought a fixer upper, you may have older, less efficient equipment as well.
Home ownership can either result in pride of ownership or a nightmare of poor planning. Make sure you pause and plan to make sure it’s the first outcome!
Related Posts
January 9, 2025
Charting Your Path to Financial Freedom: Early Retirement Planning in Your 20s and 30s
November 4, 2024
Seven Ways to Protect Yourself from Identity Theft
October 14, 2024
Navigating Your Career Move: Top Tips for an Efficient and Cost-Effective Relocation
September 26, 2024
Seven Tips to Improve Your Credit Score