Hidden Costs of Homeownership

Posted by on Wednesday, August 19th, 2015 at 4:32pm.

Money

Many of us have had the same thought when considering the move from apartment life to purchasing our first home: “The mortgage payment would be the same/cheaper than my rent!”

Although on paper that may be correct, there are several other costs that come with being a homeowner that may not be so obvious. So, how much house can you actually afford? 

Here are some of the hidden costs of homeownership that you should consider when deciding on a budget for your first home. 

Utilities

The concept of paying for utilities probably isn’t new, since you most likely had to budget for that in addition to rent. However, the cost of heating and cooling a small apartment versus a larger home can be a significant jump. Go ahead and factor in this additional cost when you’re planning to purchase your first home.

Insurance

Before you can even get a mortgage, most lenders require proof of homeowner’s insurance. The average insurance cost in Tennessee for 2015 is $78.54 monthly or $942 annually, to give you an idea. In addition, if you’re located in a flood zone, you may be required to purchase flood insurance. This is information your Realtor can provide you with from the get-go so you aren’t caught by surprise. 

Property Taxes

Property taxes are another unavoidable expense of home ownership. They vary by area and are used to pay for local government things like education, emergency workers and libraries. The amount of taxes you will have to pay depends on several factors including your appraised home value and the state/county’s set tax rate. Fortunately, your Realtor has access to the county tax records with the exact amount of property taxes the current owner pays per year. Consult your Realtor to find out this amount and see if it fits into your budget.

Maintenance

It goes without saying that if you plan to purchase a house, whether it’s a historic home or a new construction, there will be some element of maintenance down the line that will have to be considered in your budget. If you’re looking at an older home, there may be repairs that will have to be done immediately when you purchase the home. Be sure to take this into consideration when you’re deciding on which home is best for you.  

Improvements/Decorating

Although not totally necessary right off the bat, many new homeowners will want to put their personal stamp on their home. Whether that’s a new paint color, furniture or larger improvements like granite countertops or fresh landscaping, if you can’t live with the home as is, be sure to give yourself a budget for these improvements.

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