When people first think about buying a home, they may be under the impression that they only have to pay their mortgage monthly. They may be shocked to find that there are other expenses of owning a home. First time home buyers mostly focus on saving money for their down payment and finding a good interest rate when deciding how much they can afford to spend on a house. It’s important to remember that there are hidden expenses of owning a home and to factor these expenses into your budget.
Depending on where you decide to buy a home, your property taxes can be high, moderate, or low. These taxes are based on the value of your home and the area it is located. You’ll make monthly payments towards your property taxes that are included in your monthly mortgage payments.
Keep in mind that property taxes can be raised over time.
Homeowners insurance is one of the most important expenses of owning a home. It will protect your home if it is damaged by the weather, fire, or flooding. Depending on your policy, it may also cover liability, which can save you a lot of trouble in the case of an accident. This is also a monthly payment that is included in your mortgage payment.
A home can be difficult to maintain, especially if you are buying an older home. When you rent an apartment, your landlord is responsible for fixing any appliance that is broken or leaks from the roof. When you own a home, you are now responsible for fixing anything that is broken or needs repair.
Repair costs are only one of the expenses of owning a home. You’ll also have to maintain your lawn if you buy a home with a yard. You’ll have to either invest in a lawn mower or hire people to come and mow the lawn each week. You may also have to pay for weed treatments and more.
It can be expensive to keep up the appearance of your home. However, it’s one of the important hidden expenses of owning a home.
Private Mortgage Insurance (PMI)
If you put down less than 20% on your home at settlement, then you most likely have to pay private mortgage insurance. This insurance protects your mortgage lender if you default on a payment. Talk to your mortgage lender about the cost of PMI and their terms.
Along with a definite monthly mortgage payment, you will also have monthly utility payments. Just like when you were renting, you’ll have to keep paying electricity, Internet, cable, water, and gas if necessary. You can count on these expenses of owning a home to come every month.
Renovations and Additions
Over time you will most likely make some changes to your home. You may want to add a deck or patio at some point. Maybe you’ll repaint the bedrooms or kitchen a few times until you find the perfect color. You’ll want to customize your house to your liking, which may be unexpected expenses of owning a home.
Set a Realistic Budget
Now that you know just some of the hidden expenses of owning a home, you can set a realistic budget when buying a home. You’ll have to account for more than just a monthly mortgage payment. Consider property taxes, homeowners insurance, maintaining the home, monthly utility bills, and possible renovations or additions before buying a home.
About Agent Lady: Cherise Wynne is a leading real estate agent in Philadelphia, helping home buyers and sellers navigate the City of Brotherly Love, with a special focus on first time home buyers. To chat about getting started with your first time home buying experience, click here.