Hidden Costs of Owning a Home

Homeownership is a huge goal for many Americans. It’s also considered one of the biggest symbols of upwards mobility. This general opinion, combined with the fact that the real estate market has been consistently doing good over the past few years, makes lots of people feel like they should be in a rush to buy a dream home of their own. The problem with this is that it drives people to forget all the hidden costs of owning a home and go into it under-prepared. Let’s discuss the more easily forgotten homeownership-related expenses, from homeowners’ insurance and HOA fees to repairs and maintenance. That way, you’ll be able to make a more informed decision regarding whether you’re ready for homeownership.

Property taxes

When you rent a home, property taxes are the responsibility of your landlord. This is because even though you live in that home, it’s still technically their possession. But, if you purchase a home, those taxes are yours to pay. They aren’t as much of a hidden expense as some of the others on this list since many people are very aware of them. However, although many people know about them, it’s extremely common for first-time homebuyers to forget to account for them when outlining their budget. This is especially important since the government can put a lien on your home if you don’t pay them on time.

One way to ensure you’ll never get into trouble with your property tax payments is to roll them into your monthly mortgage payment. Although this isn’t possible in every state and city in the US, it’s a great idea if you can do it. You’re sending your mortgage lender a fraction of your property tax payment every month so that once they are due, your lender can compound them and help you pay.

Insurance

Homeowners insurance is an extremely important expense that people disregard way too often. Since your lender usually requires it, it’s common for people to try to cheap out on it. This is always a bad idea. It’s your first line of protection against losing your house to something like a natural disaster, housefire, or flood. You should try to account for it in advance and take your time budgeting accordingly. As long as you do that, it’s possible to afford great coverage while still staying on budget.

Pro tip – Try contacting multiple insurance agencies and getting more than one quote on your home insurance. Not every home insurance is made equally. Sometimes, spending a little bit of extra time researching them can save you a lot of money.

HOA/Condo fees

Most residential communities today have some kind of homeowner’s association in place. The job of an HOA is to set certain standards in the community that are meant to preserve property values and generally contribute to the neighborhood feeling more pleasant for residents. If you own a home in an HOA‘s territory, you have to pay a fee to the organization to help fund its activities. And if you included condos in your home search, you’re liable for condo fees. Even if you’re not a fan of HOAs, you’ll still have to pay HOA fees. Otherwise, they can put a lien on your home until you do.

There are two ways to mitigate the hindrance that these fees can sometimes represent. Firstly, you can try to find a home outside of an HOA’s territory or not a part of a condominium complex. Otherwise, you can break the fee into 12 more manageable monthly payments without interest.

Repairs and replacements

In general, the first thing we advise you to do after moving into your new home is to inspect all the systems within it and check whether all of your appliances are working properly. Inspecting a new home is vital, and one of the most commonly overlooked hidden costs of owning a home is repairing and replacing your home’s appliances and major systems (plumbing, HVAC, etc.). Of course, the most frustrating situation with these is having to go through this expense before you’ve even moved in. Luckily, this isn’t very common, but it’s better to be safe than sorry.

After living in the home for a while, some things will naturally start failing. For example, most smaller appliances in the home have a lifespan of around nine years, while larger ones like dishwashers can last up to around 15 years. As a renter, most of these problems are your landlord’s responsibility. But, when you’re the owner of your home, it’s up to you to fix anything and everything that breaks within its walls.

Pro tip – You can start a savings account meant to serve as an emergency fund so that you can pay for any major repairs or replacements in cash. That way, you’ll always be prepared for these issues and be able to avoid spending more money than you must on interest rates.

Regular maintenance

As a homeowner, you are solely responsible for completing every maintenance task on the property. That includes everything from mowing the lawn and cleaning the gutters to filling up holes in the walls. Of course, you can delegate some of this work to professionals. Although many benefits come with buying a home outside the city, this can bring in one of the biggest negatives. You’re mostly left to your own devices, and a handyperson or cleaning crew might take some time getting to you. The biggest hidden expense here comes up if you don’t do any of this on time. If you’re part of an HOA, you can get a fee for not caring for your home properly.

Luckily, there’s a great way to mitigate this hidden expense efficiently. Perform your diligence in prevention. As long as you’re consistent with your home maintenance and upkeep, you shouldn’t be faced with too many tall expenses.

Major renovations and repairs

After a while, your home will naturally require certain major renovations or repairs. Because this usually doesn’t happen very soon after purchasing the home, most buyers forget to account for it; however, it’s one of the biggest hidden costs of owning a home. That’s why it’s important to start planning for it well in advance.

There are two main things you should do. Firstly, the sooner you learn how to fix certain things, like a broken heater or a fallen shelf, the better. Experts from number1movers.ca also recommend utilizing a nearby storage facility unit to keep backups and tools for such situations. Secondly, a savings account or emergency fund can go a long way if your home needs a repair that you can’t do alone.

Is homeownership worth it?

Short answer – yes, homeownership is still definitely worth it. However, things can easily get out of hand if you’re not prepared for it well enough. It’s important to understand that saving for a down payment isn’t enough for you to be ready for homeownership. But, as long as you remember to account for all of these hidden costs of owning a home in your budget and carefully consider how you would go about covering them, you should be able to avoid a lot of stress and truly enjoy owning your own dream home.

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