9 Surprise Costs That Come With Home Ownership

Posted May 1st, 2012
by Isabell Davila (no comments)

Owning a home is the epitome of the American Dream. However, as a first-time homeowner, you may be faced with many challenges. Leaky roofs, maintenance issues, and repair costs can make any first-time buyer long for those simpler renting days. If you’re like most people, preparing a budget is one of the first steps you’ll take before buying a property. Unfortunately, before many first-time buyers close the deal on their dream home, unexpected and extra costs force them to go back to the drawing board. It’s important to create a sound budget plan before starting the process of home-buying, as it will be much easier once you have added all other extra costs such as legal charges, moving costs, and realtor fees. Here are some other surprise costs that come with owning a home.

  1. Closing Costs

    Inexperienced home buyers may believe that “zero down” deals means not paying a dime up front. However, closing costs are usually 4 to 6% of the total cost of the home. Your real estate agent may advise you to have at least $1,000 to $5,000 on hand before you even start the process of looking for potential homes. You also may want to negotiate with your real estate agent, as sometimes closing costs can be split with the seller, but as a rule of thumb, plan to spend a couple thousand bucks for closing fees. This includes inspections, code violations, and title transfers.

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  3. Taxes

    Property taxes are a big part of the costs of your home each month. Even if you have a fixed-rate home loan, chances are your property taxes could go up according to the market and increase your monthly fees.

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  5. HOA and Condominium Fees

    When moving into a condo, or a home in certain neighborhoods or gated communities, you will be required to pay a monthly or quarterly fee. Whether these fees are for general upkeep, trash disposal, utilities, or other services, don’t be surprised if your homeowner’s or condominium association raises the price per month at their discretion. They may also charge you a separate fee for large projects such as fixing a community gate or repaving a driveway.

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  7. Lawn Maintenance

    Maintaining the appearance of your lawn or backyard is another hidden expense you may want to calculate into your budget. Lawn equipment, installing a sprinkler system, or hiring a lawn care professional can be quite expensive, especially if your budget is already tight. You may want to consider buying a home with a smaller yard if you don’t want to deal with so much lawn care.

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  9. Home Repairs and Re-modeling

    When moving into a home, there are many repairs that you may need. While fixing loose tiles, customizing your bathrooms, removing dead trees, or other small repairs may not cost a lot, they may add up over time. Older homes will have even more unexpected fixes like repairing your roof, garage door, or paying for mold mitigation. The best thing a homeowner can do is set aside a separate part of the budget for emergency repairs. You’ll have to calculate a reasonable amount depending on the condition, size, and age of your home.

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  11. Home Insurance

    Even if you have had renter’s insurance in the past, there are many differences when it comes to home insurance. The most distinguishable difference is cost. Since you are essentially paying for the ability to rebuild your home, replace your valuable possessions, and damages to your property, there is much more at stake than with just renter’s insurance. In addition, consider that you may also need supplemental insurance if you live in natural disaster zones which are prone to flooding, earthquakes, or hurricanes.

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  13. Moving Costs

    If you’re moving within several hundred miles, it may not be such an imposing problem. However, consider a drastic move across state lines, or even to a different country, and you’re looking at a hefty bill just for moving costs. Not only will you need to pay for a moving company, rent a truck, or ship your belongings, but you may need an immediate deposit just to start your utilities.

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  15. Furnishings

    Although this is more of a discretionary expense, many first-time home buyers face the challenge of moving into a much larger space and not having nearly as enough furniture to fill the space. You can always wait a bit to buy extra decorative items, but you’ll at least need some new furniture to start. Keep your expenses in check by waiting to buy larger items only after you’ve shopped around or compared prices. Sometimes, a home will not come with key appliances like a refrigerator or washer and dryer and you’ll have to furnish it yourself, so budget accordingly.

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  17. Utility Bills

    Moving from a smaller apartment to a home also means an increase in your costs for electricity, gas, and water. You may also face different garbage collection fees, along with changing your internet, cable, and home phone service. It’s always a good idea to over-budget, rather than end up shorthanded, so before you make your move, factor in higher utility bills per month.

Categories: Advice

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