Hidden Costs of Owning a Home You Need to Be Aware Of
Home ownership can be a wonderful thing if you have cost transparency. And it’s not impossible to achieve that – even with laws and regulations varying from state to state, there are points which affect all home owners equally. Read on to find out more about the most important costs of owning a home which are tend to be overlooked by first-time home buyers.
The experiences house owners had when buying their first home can vary a lot. One thing that all of them would immediately confirm is that is requires a lot of time and energy to find the right house that is a decent compromise between what you want and what you can afford.
But what does that mean, to be able to afford a home?
It means being able to both purchase and maintain a home and still being able to pursue your normal living habits. In order to do so, it’s necessary to be aware of the true costs of owning a home. And the earlier you know about this, the better you’ll be able to handle the upcoming expenses and avoid coming to a financial dead end.
Step 1: Determining the True Costs of Buying a Home
Real estate experts will all tell you that you shouldn’t confuse the price of the house with the price of the house purchase. The actual buying of a home has to be paid for as well – and assuming that these so called closing costs cost between 2 and 5% of the purchase price – these additional costs are not to be taken lightly.
Step 2: Determining the True Costs of Owning a Home
As unpleasant as it may sound, the mortgage payments you make each month are just one expense you have to make after moving into a house. Here are some of them:
Houses need a rather large amount of care, which can only be provided with the according appliances and tools.
Sure, you won’t mind if the seller takes the washer with him – buying one appliance isn’t a big deal. But what if several appliances need to be bought? Individually, they may not be expensive, but it adds up rather quickly.
(Friendly tip: buying appliances of poor quality because they were affordable often ends with more than poor outcomes. Don’t save on life quality)
Don’t forget the outdoors: one major expense of owning a home involves tools and appliances needed to maintain the outside and the property itself. You’ll need a hedge trimmer, a de-icer, something for the snow, the leaves, and of course:
This is one of the biggest and most unexpected costs of owning a house that most people tend to overlook. The least you’ll have to do is to buy a mower, but be prepared to spend both money and time if you want to have a decent-looking lawn in front of your dream home.
Some like to do an entire makeover when moving to a new space, but reusing and rearranging your old pieces in a new place can be just as beautiful.
If you are, however, moving into a bigger place, you’ll probably need to buy some furniture in order to fill the rooms. Depending on how many pieces of furniture you need, this can really strain your budget. Look for alternative ways to shop for furniture. Craigslist has some great pieces of furniture that can help you lower your expenses.
How much it would cost to move your belongings depends on how far your new home is, what exactly you want to move and what the total weight is. Check out some of the online moving calculators to get an idea of how much you’ll have to pay for moving your things to your new home.
This might seem like a no-brainer, but let’s just repeat it to be sure: water is not free! You pay for it – and in some states, you pay quite a lot! And such expenses of owning a house can definitely be trimmed down.
Depending on where you live, water or trash services can go into the three-figure range. It is, however, possible to minimize these costs with a few initial investments and to switch to low-flow installations which minimize water usage. It pays off!
Home buyers are requires to show proof of a homeowners insurance before they can get a mortgage. This type of insurance covers the property in case any damage or other type of loss occurs (but not your personal possessions!).
The fee that is paid each month depends on the loan, as well as on the house itself, such as the size or age of the house.
Maintenance and Repair.
Most of us know that repair work and maintenance just comes with owning a home, but not everyone is aware that here lie the biggest and often most unexpected expenses home owners have to face.
You can certainly minimize these costs by doing some of the work yourself, but if you’re still new to this, and if you haven’t had any serious repair work done so far, we recommend asking a pro to do it for you.
The list of things that need to be on your repair and maintenance work list could grow very big – together with the costs of taking care of them.
Having a separate account or any other way to set aside enough money to cover such costs is a very smart idea. It’ll help you manage and take care of the costs of the repair work and not make other financial compromises or even be unable to pay for them.
Financial experts suggest that the amount of money set aside for repair, replacement and maintenance work should be about 1% of the purchase price.
The costs of home ownership are high – but so are the gains!
Even though it might seem impossible to handle all of these expenses in one life, there is hope: Many of these costs don’t occur on a regular basis and are usually one-time purchases that stick around for years after that.
If you want to find out whether you’d be able to handle the long-term financial commitment that comes with owning a house, you should check out this household budgeting calculator, which can give you a clearer picture and help you come up with a healthy budget plan.
To sum up: Being aware of possible costs that come after the house has been bought is the first step to mastering them. The costs of owning a home are much easier to handle if you know which ones you’ll be facing and which ones can even be trimmed. Don’t let your dream home become a financial nightmare!