5 Hidden Costs of Owning a Home
Whether you’ve been entertaining the idea of buying a home or have already purchased one, it’s important to be aware of costs beyond the mortgage payment. These seemingly hidden costs can add hundreds to thousands of dollars a year in expenses.
1. HOA – Homeowners Associations can make or break your home owning experience. Find out if the property belongs to an HOA. If it does, it’s important understand what the HOA fee is, how often it is paid and what it covers. In addition, it is vital you fully read the association’s bylaws before making an offer on a home. HOAs can restrict things like paint colors, plants, yard maintenance, additions, parking and so on. While it is important to know what you’re getting into, it’s just as important that you don’t break the rules as it can be costly to undo whatever rule you have broken.
2. Maintenance – Experts suggest adding a budget of 1% of the total cost of the home for basic maintenance each year, also known as the One Percent Rule of Thumb. For example, if you buy a $350,000 home, you can expect to pay $3,500 a year on maintenance, on average. The cost may be lower some years, but eventually you will need a new roof, windows or other big ticket items. A few factors to consider in this estimate include age of the home, the location and typical weather conditions. These factors can all impact the overall expense substantially and it is important to take an objective look at these items before buying.
3. Lawn Care – Mowing is a weekly event folks! If you’re planning on keeping up your yard yourself, you will have the initial and ongoing costs of tools to manicure and maintain your lawn. If you plan to outsource, these bills can add up quickly. If your HOA bylaws require specific maintenance, the costs can rise even higher. If you’re planning on buying a home, you’re likely excited about the idea of more space, but these costs may factor into what type of lot you pick and the size.
4. Cleaning – If you’re investing in your first home purchase it’s safe to assume you will likely be moving to a larger space than your current rental. Just remember, more square footage equals more time to clean. Whether you’re cleaning it yourself or plan to hire help, sticking to buying only the amount of space you really need may be more cost and time effective.
5. Emergency costs – Washer stop working? Heater suddenly not turning on? All of these things that had been covered by landlords are now your responsibility. Making sure you have the means to cover these unexpected costs is a part of home ownership. It’s only a matter of time before something unexpected happens, and the more you prepare the less impactful these things will be on your daily life.
While this list can seem daunting, there is an upside! Stay tuned to our next article on the benefits of home ownership!