It has been about 10 years since my very-ambitious wife decided to become a realtor and begin investing in real estate. She loves taking distressed properties and transforming them into beautiful homes. Not only does it improve a neighborhood drastically, it places a few dimes in our pocket.
As with many major purchases, there can be hidden costs when buying a home. But these buried expenses don’t stop once you “close” and have the keys. You also need to think about how much it’s actually going to cost to live in your new home; mortgage payments are only one part of your expenses.
You also need to budget for taxes, insurance, maintenance, utilities, yard work, repairs, and other costs. The first two most often are included in your home payment, through escrow but make sure you are realistic when calculating for all these – they add up quickly.
- water and sewer
- trash pickup
The cost for an entire house can be significantly higher if you’re moving from a smaller place. While it’s hard to estimate the cost of utilities, you may want to request the present homeowner’s utility bills for the past 12 months to get an accurate picture of energy costs throughout the year. Also, keep costs down by making your home more energy efficient.
Property taxes. Property taxes are based on the value of your home, so the more expensive your house is, the more you’ll have to pay. Although taxes vary widely across the country, you can use a property tax estimator to get a rough idea of what to budget, see Fizber Property Tax Estimator as one example.
Insurance. Insurance premiums vary depending on where you live and a variety of other factors, including the size, type, and age of your house. It’s up to you to choose the coverage and limits that meet your needs, but it’s best to talk to your agent – or get one if you don’t have one – to help you choose your protection.
Homeowner fees. Many townhouses or condos have homeowner association (HOA) fees. Some of the costs covered can include exterior and interior maintenance, landscaping, water, sewer, garbage, parking lots and courtyard sidewalks, and lawn care. Onetime special assessments may also be levied to pay for emergency repairs or extensive improvements.
House repair and maintenance. This can include anything from minor touch-ups to major repairs. Cleaning and repairing of gutters and chimneys, interior and exterior painting, roof repair, fixing electrical systems and plumbing, and pest control are a few of the tasks to consider. While expert opinion varies, estimate spending between one to four percent of your home’s value annually on maintenance and repairs.
Yard care. Mowing, edging, seeding, trimming, fertilizing, watering, weeding, planting flowers and shrubs, re-sodding, and removing snow can all add up whether you do it yourself or hire a professional.
Appliances. Chances are most major appliances will come with the house, but this is not always the case. You may have to provide (or replace) the refrigerator, stove, microwave, dishwasher, or washer and dryer.
Remodeling. Redoing floors, opening up rooms, renovating kitchens and bathrooms, or adding square footage can improve the quality and value of your home, but the costs can add up quickly. You may want to prioritize the most important updates and budget for them over several years. Be sure you select a reputable and insured home contractor to help you – and ask to see their insurance certificate and contractor’s license.
Owning a home can be a great investment personally and financially, so don’t let all of these hidden costs get you down. Now that you know some of things to look out for, you can be realistic about the time and money it takes to own and maintain a home.
If you live in PA or OH, call us to help you plan and choose your insurance to make sure are getting exactly what you want and need. We may well save you a lot of money on your auto, life, and other coverages using bundling discounts.