10 Costs with Home Ownership

Costs to Consider When Owning a Home

The cost of owning a home is more than just your down payment and mortgage. Before you take the steps towards homeownership, it’s important to consider all the responsibilities that come with it. It’s important not to try to “stretch” your money—give yourself hard limits when it comes to your budget, and think realistically about what you can afford.

As a Mortgage Loan Officer for more than 20 years, I have worked with many families throughout the process of securing lending for a new home. Especially if you haven’t owned a home before (and even if you have), it’s important to consider ALL of your costs before closing.

I’ve created this list of common costs everyone needs to consider when owning a home:

1. Mortgage Payment – Unless you are paying cash for a home, you’ll have some type of lending and mortgage to pay off. You will have a monthly payment to make, to remain current on the loan.
2. Homeowners Insurance – Also very important is homeowners insurance, which protects you and your family in the event of damage or liability on the property.
3. Home Warranty – Similar to insurance, this warranty is often considered when first moving into your home to help avoid paying for costly repairs or replacement of major systems and appliances in your home. For instance, if your furnace needs replacing a short time after moving in. A home warranty can help you pay for the replacement.
4. HOA Fees (if applicable) – Many communities have a homeowners association (HOA), which governs the community and pays for the maintenance and upkeep of community properties, parks, landscaping, and more. Fees can range from just a few dollars a month to thousands, depending on what amenities are available to homeowners. Be sure to check the community bylaws and annual fees prior to closing on your home.
5. Emergency Savings – Event if you have a home warranty, you’ll want to have some money set aside so you’ll be able to pay for maintenance on your home. Your emergency savings can also help pay your mortgage, car repairs, or any unplanned event for which you need cash.
6. Landscaping – If you are building a new home, adding on to an existing one, or even doing major remodeling, you might need to do major landscaping. In a new construction home, you’ll have to plant grass, pave a driveway, and more. No matter the age of the home, you may want to add a patio or outdoor kitchen/entertaining area.
7. Property Taxes – When purchasing your home, consider also the annual property taxes associated. Plan ahead with a savings account or have the money for your taxes escrowed with the mortgage loan so you will have the funds to pay your taxes when the time comes.
8. Electric Bill – Utilities can be a large part of your monthly expenses. No matter what part of the country you live in, you’ll have seasonal highs and lows. A good plan is to estimate your electric bill for a very cold and/or very hot month and set aside that amount each month to cover the bill.
9. Water Bill – Much like the electric bill you want to plan for the water usage bill as well. Often the water bill is quarterly to your local municipality. Check before you buy your home to see what the average water bill is in your area. It can be a very large expense if you have a big family or a new construction/landscaping where you will have to water the new plantings as they begin to grow.
10. Wi-Fi/Cable Bill – Last, but certainly not least don’t forget about your television and internet services. Show around to see which plans are best for your family and which fit your budget.

I work with my clients to look at all of their monthly expenses prior to mortgage pre-approval. When mortgaging a new home or refinancing an existing one, you should always be prepared to comfortably pay all your monthly expenses. If you are considering home financing, contact me for more information and to being the pre-approval process.