Hidden Costs of Homeownership

When it comes to owning a home, your monthly mortgage payment only tells part of the story. While you’re shopping for a home take the time to consider the realities of homeownership and its costs. Knowing more about what some of the “hidden” costs of owning a home are can help you be more prepared when you’re ready to put in an offer on a home.  

General home maintenance

The cost of general upkeep can be a surprise to first-time buyers who were used to renting. As a homeowner you’ll need to plan for seasonal maintenance like: 

• Lawn care
• Leaf cleanup
• Snow removal
• Gutter clean-outs
• Furnace inspections/furnace filters

Most of these things you can likely do yourself, but you’ll need to plan on buying a mower, rake, shovel or snow blower. Keep an eye out for end-of-season sales or second-hand finds. 

Some experts use a 1% rule, saying that over 10 years of homeownership you can expect to pay an average of 1% annually on maintenance costs. That means a $250,000 home might need around $2,500 per year in maintenance. 

Improvements or remodeling

You may have grand plans to make your new home your own right away, but those improvements can come with hefty price tags. Smaller DIY projects like fresh paint or new light fixtures can make a major difference and are more manageable expenses as you save for your bigger remodeling dreams. 

If you do plan to make any major improvements immediately like replacing windows, getting a new roof, or renovating the kitchen for instance, include those costs when making your budget and planning for your down payment.  

Unexpected home repairs

Unlike an exciting remodeling project you can plan for, an unexpected repair is something that appears suddenly and must be dealt with whether you’re ready for it or not. 

It’s a good idea to set aside some savings for potential issues such as a leaky roof, cracked window or burst pipe. An unexpected repair is no fun but being as prepared as possible (that means having funds on hand to cover costs) will make it less stressful. 

Some qualified first-time buyers may be able to open a home equity line of credit (HELOC) at the same time they close on their mortgage, giving them a source of cash when it’s needed. Learning more about home equity options before you need them could save you a headache down the road. 

Furniture & decorations

If you’re moving into a larger space than your previous residence, you’ll probably want to purchase new furniture and update your décor. And, even if the space is about the same size, you may just want to refresh some of your pieces for your new home. 

While these expenses can be one of the more fun aspects of homeownership, they can still add up quickly. Shop around and be prepared for what’s realistic to spend on that new sofa (heads up: even “affordable” furniture can be pretty pricey).  

Utilities

A larger home footprint also comes with increased utility costs. Heating, air conditioning, water and electricity are all standard but don’t forget to think about other necessities like internet and TV subscriptions. 

You can help keep costs under control, and help the environment, by making small adjustments like: 

• Keeping the thermostat at a moderate temperature(a programmable thermostat can help)
• Loading the dishwasher efficiently
• Shutting off electronics when theyaren’tin use
• Replacing old light bulbs with energy efficient versions
• Choosing energy efficient appliances whenit’stime to upgrade

Homeowner association membership fees

Depending on the type of property you purchase, you may need to budget for Homeowners Association (HOA) or condo fees. 

HOA fees go toward the upkeep of the neighborhood while condo fees are paid to maintain the building, amenities and shared areas. There’s a wide range in the cost of these fees, but it’s usually at least a couple hundred dollars per month. 

Part of owning a home is knowing it’s never truly “done.” Being as financially prepared as possible for both unexpected and planned expenses will save you time and stress over the years.  

Ready to buy? Get in touch with our local mortgage lending experts or get preapproved. 

Still researching? Explore our Mortgage Learning Center.