Many first-time home buyers experience a rude awakening. Often, they don’t anticipate many of the hidden costs of home ownership. Which is something that ultimately leaves them reeling if they aren’t financially prepared for emergencies. Luckily, it is possible to essentially learn from the experience of others. As many generations of home buyers before them have been down that road. With that in mind, here’s a look at seven hidden costs of home ownership that every prospective buyer needs to keep on their radar.
1. Property Taxes
While most home buyers understand that they’ll have to pay property taxes, only a few have an accurate idea of what that’ll look like. It isn’t uncommon to incorrectly estimate what you’ll owe. However, with a bit of diligence, it’s possible to track down a reasonably accurate number quickly. In many cases, you can find it in the MLS listing. Otherwise, most municipalities have a search tool that allows you to look it up.
Additionally, many don’t know that the cost of property taxes usually gets wrapped into your monthly mortgage payment. The lender uses that approach to help ensure you remain current, putting the money into your escrow account until it’s sent to the proper municipality, usually in two annual installments.
2. Lawn Care
If you previously lived in an apartment or in a rented property where the landscaping was handled by the owner, it’s easy to overlook how much lawn care can cost. Buying all of the necessary tools can set you back several hundred dollars at a minimum. If you opt to have it handled by a professional, routine maintenance may run $100 or more a month, while more in-depth upkeep could cost several hundred or more for a single appointment.
3. Pest Control
Another cost that renters don’t shoulder but homeowners often need to handle is pest control. Usually, preventative treatments are the best approach, as they stop potential infestations before any trouble can occur.
However, depending on the kinds of treatments involved and the size of the property, that can easily run several hundred dollars a year. While that is far less than the cost of dealing with an infestation and any resulting damage, it’s still a big bill that many new homeowners don’t expect.
4. Missing Appliances
When you buy a home, it isn’t uncommon for every appliance to be left in place except refrigerators, washers, and dryers. While you may be able to delay picking up a washer and dryer, living without a fridge isn’t necessarily an option.
Since a refrigerator can cost anywhere from a few hundred to several thousand dollars, it can be hard to squeeze into a budget after handling all of the home buying-related expenses. If you need a washer and dryer too, that could run an additional several hundred to more than $1,000, depending on what you buy.
5. HOA Fees
Purchasing a home that sits in a homeowners’ association (HOA) zone usually means paying monthly or yearly dues. These funds support the HOA’s operation as well as cares for various community assets or services.
HOA fees can run the gamut. Some may be a few hundred dollars a year, while others are several hundred dollars a month. That’s why knowing what they are in advance is essential. If you fall behind on your dues, there can be consequences, including a lawsuit against you or a lien on your property.
6. Repairs for Damage Due to Negligence
Even if you get a home inspection before you buy your house and no major issues are spotted, that doesn’t mean everything is squared away. Inspectors may not spot every problem, even if they are fairly diligent, as some are hidden from view.
While new homeowners might assume that certain kinds of damage are covered by their homeowners’ insurance, if the damage is due to negligence, it usually isn’t. That means, if the previous owners didn’t perform proper routine maintenance, your insurer might not have to foot the bill. Instead, it will be solely your responsibility.
New homeowners usually understand that they’ll have to handle their own utility bills. However, it isn’t uncommon to underestimate their size. If your house is larger than your last rental property, you may not realize how expensive it is to heat, cool, or otherwise power. Similarly, if your rental property had water, sewer, and garbage costs included, you might not understand how much these usually run.
In some cases, you can get estimates by calling the utility company and inquiring about past data on the property, or averages in your neighborhood. However, these won’t be based on your level of use, so they can still be inaccurate.
Ultimately, it’s critical that homeowners understand the potential impact of all of the costs above, ideally before they move into a new house. That way, they can get accurate estimates when possible or, at least, understand that these expenses are part of the equation. Then, they can plan accordingly, ensuring a surprise cost doesn’t become a budget-buster. If you’re looking to buy a property as an investment you could always avoid all these costs of home ownership by investing in a service such as Roofstock.
One cost that also occurs is the cost once your mortgage is out of its fixed period, the rate can adjust upwards. Pangea Mortgages utilize their best brokers in Ireland to find you the best available mortgage rate so that you are always paying the lowest possible price. As a first time buyer, you may not be aware of this clause in the loan offer so make sure to ask your mortgage broker or use a mortgage calculator to find out the long term costs.
Do you know of any other hidden costs of home ownership? Share your thoughts in the comments below.
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