Thanks to impressively low interest rates and significantly lower housing prices, it is becoming easier for the average person to get an affordable deal on a new home.
While the current market favors new home owners, it is important to understand that home ownership does not magically end once a home is purchased. Owning a home comes with costs that extend over the lifetime of home ownership.
Before jumping into the purchase of your dream house, you should be aware of these four things you no one tells you about home ownership:
1. Monthly Costs
In addition to your monthly mortgage payment, there are also other monthly costs associated with home ownership. Some of those costs may include:
- Water
- Electricity
- Gas
- Garbage collection
- Phone bill
- Internet
- Cable
- HOA fees
It is important to realize that you will be responsible for these monthly costs when you buy your own home.
2. Maintenance
If you want to avoid costly repairs on your home, it is important to schedule regular maintenance for appliances, gutters, chimneys, and HVAC systems. You may also want to plan for regular exterminator maintenance if you live in an area that is prone to insect and rodent infestation. The good thing about maintenance costs is that they are typically quite low and help to ensure that everything works seamlessly in your home.
3. Repairs
Even if you religiously schedule maintenance services for your home, you will inevitably run into problems that need repairs. Some things are inexpensive to repair, such as loose shower tiles or leaky faucets. Other repair items may be much more expensive, such as roof replacement or flood repairs from a backed up sewer system. You should be prepared to deal with unexpected repair costs before purchasing your first home.
4. Home Insurance and Property Taxes
Homeowners are required to purchase home insurance, which may be paid for on a monthly or annual basis. As a homeowner, you will also be responsible to pay property taxes every year.
Before you purchase your first home, it is important to understand the various costs of home ownership that one tells you about.
(photo by 1lenore)
So true! I did not factor in the cost of home ownership 16 years ago – when we bought our house. There must be a formula out there to help people figure out how much they should expect to spend each month, year, 10 years, etc. on their home. Last year, we had to pay $10,000 for a new roof. Ouch!
I’ve always heard setting aside 3% of the value of the home annually is a good starting point. If your home is brand new this is probably excessive, but if your home is 20+ as ours is and still has original everything this may leave you way short when everything goes at once. Probably setting aside enough to simultaneously cover the 3 most expensive items you can imagine replacing is sufficient. Three years ago we did our first replacement since building new. We replaced the complicated roof on the house and also the separate garage (which is the size if a small house). That set us back $18k. Next up are the windows. When we built 20yrs ago they cost $22k and I don’t imagine windows have gotten any cheaper in the last 2 decades. Spending money to upgrade to snazzy new finishes or features for your home is a little easier to take. Dropping $40k just to replace exactly what you had stinks.
I didn’t know about that 3% rule. Thanks.
Not to mention the amount of time to clean the house and maintain the yard. I thought I wanted the “big” house, but it turns out that I would much prefer a smaller home now so I can spend more time doing the things I like on the weekend and save more money too!