Owning a home is a dream come true for many, but the hidden costs of homeownership can be a surprise. You are paying the mortgage payments, property taxes, and utility bills. But there’s more to homeownership than those expenses. In this article, we’ll explore five hidden costs of homeownership you may not have considered when purchasing the property.
Hidden Costs of Homeownership: Maintenance and Repairs
One of the biggest challenges for new homeowners is the cost of maintenance and repairs. Unlike renting, where your landlord takes care of upkeep, homeowners are responsible for fixing everything from leaky faucets to major structural issues. As a rule of thumb, set aside 1-2% of your home’s value each year for maintenance and repairs. Order a home maintenance inspection every year or two to find issues before they become significant problems.
Landscaping and Yard Work
Another expense that homeowners often overlook when planning a budget is landscaping and yard work. Keeping the lawn and garden in shape requires time, effort, and money. You’ll need to invest in lawn equipment, tools, fertilizer, seeds, and other supplies. If you’re hiring someone to do the work, costs range from hundreds to thousands of dollars per season, depending on your needs and the size of the yard.
Homeowners Association Fees
If you live in a community with a homeowners association (HOA), you must pay monthly or annual fees. These fees might be a few hundred to several thousand dollars per year, depending on the amenities and services the HOA provides. Understand that HOA fees may increase over time, so be prepared for rate hikes.
Hidden Costs of Homeownership: Insurance Premiums
Homeowners insurance is necessary to protect your investment from natural disasters, theft, and liability claims. However, insurance premiums can vary widely depending on your location, the age and condition of your home, and other factors. Get several quotes from different insurers to find the best deal. Additions or renovations to the property can affect your premiums, so factor higher insurance costs into the budget of major projects.
Property Taxes
Property taxes are a major expense for homeowners. The amount you’ll pay depends on your property’s assessed value and local tax rates. Property taxes can sometimes be so high they make it difficult for homeowners to afford their monthly mortgage payments. When shopping for a home, factor in property taxes to create an accurate monthly budget. After you buy a home, keep up with the local tax code to watch for increases or changes in the tax rate.
Owning a home is a big responsibility; the costs are more than just a monthly mortgage payment. From maintenance and repairs to HOA fees and property taxes, there are hidden expenses to consider when budgeting for homeownership. By being aware of these costs, you’ll be better equipped to make informed decisions and avoid financial surprises. Owning a home can be a great investment, but it’s important to approach it by researching and understanding your budget.
Libra Inspections offers inspections to homebuyers and sellers in Central Illinois. Contact us to schedule an appointment for our services.