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6 Unexpected Costs of Owning a Home

Homeownership is one of the quintessential parts of the American dream. The house with a yard and a picket fence is, to many, a sign you’ve finally “made it” — and having a place to truly call your own can be immensely rewarding.

But owning a house is more than just finding a real estate agent, making a down payment, and paying a mortgage. There are a lot of expenses to homeownership that new or aspiring homeowners don’t know about.

Hidden Buying Costs

Most people who want to own a home know about the dreaded down payment.

A typical down payment on a house is about 20% of the house’s value. What you may not know is if you don’t make a down payment, you’ll likely have to pay private mortgage insurance, which can significantly add to your monthly mortgage payment.

In addition, there is also the cost for home inspection, which you’ll definitely want to have done before making your final buying decision. The bank will also require fees for an appraisal, and there will also be closing costs. Overall, you can expect to pay an additional 2-5% of the home’s value upfront when buying. Some of these costs can be taken care of by the seller, but you should still be aware and ready.

Property Taxes

You’re probably already expecting to pay property taxes on your house.

But what you may not know is that property taxes aren’t determined by your bank or lender. They’re determined by your location. Property taxes are generally about 1.1% of the assessed value of the home but can vary widely in either direction — to less than 0.5% to over 2%! So, it pays to do your homework before you buy and figure out just how much you’ll be paying in property taxes for as long as you own the home.

Extra Homeowner’s Insurance

Most aspiring homeowners have already done the research on homeowner’s insurance and expect to pay insurance on their home, especially because most banks and mortgage companies require it, and may even be included in your mortgage payment. What can be unexpected is what insurance doesn’t cover.

For example, most homeowner’s insurance doesn’t cover “acts of God” like earthquakes, hurricanes, floods, and water damage from storms. Insurance against burglary and theft may not cover everything you’d expect either. That’s why it pays to have some extra homeowner’s insurance on hand for when you really need it.

House Maintenance Costs

Depending on the age of your home, maintenance and upkeep can either be a routine expense, or an ongoing struggle. How the home was maintained by the previous owners also makes a big difference.

One thing is for sure: home maintenance is an ongoing process.

Fixing and replacing appliances, painting, inspecting areas for problems, cleaning the gutters… there’s a whole list of things that will need tending to. Naturally, not all of these will be expensive… but you should also be prepared for the day your refrigerator or oven gives up the ghost. You’ll also want to be prepared for problems in your electrical system or plumbing, especially if they’re on the older side.

Yard and Garden Upkeep

Keeping up your yard and garden is an expense that can vary widely depending on what your yard looks like.

You’ll likely need to budget a modest amount for routine upkeep like mowing the grass and snow removal — but if you have trees to trim, leaves to clean, a garden to plant, or other outdoor work, that all costs money. Even if you decide to do it yourself rather than hiring someone else, that still involves the cost of supplies.

HVAC Costs

Your heating, ventilation, and air conditioning (HVAC) is one of the most important components of your home — it keeps you warm in the winter, cool in the summer, and safe from the elements all year round.

That makes it especially important to keep it properly maintained. Air filters must be changed regularly, AC units must be kept clean and maintained. A yearly inspection of your furnace is a great idea. Added to which, furnaces and AC units, like all appliances, have a limited lifespan. Sooner or later, they will fail, and you’ll want to be prepared when they do.

This also means keeping an eye out for things like condensation, mold, and other by-products of heating and cooling a home. It’s best to inspect your HVAC system regularly and prevent or fix any problems before they lead to a much bigger expense.

None of this is meant to be discouraging to aspiring (or existing) homeowners. There’s no doubt that owning a home can be an expensive proposition! But the rewards you gain in return — comfort, peace of mind, pride in ownership, and the freedom to truly make the home your own — those things can make it well worth the expense in the end.

Jeff Campbell