Buying a house is a major life milestone and can be an exciting experience. However, it’s important to remember that there are many expenses associated with it that are often overlooked. Before committing to buying a home, make sure you can afford all of these new expenses.
One of the most obvious expenses is a down payment. The amount you need to make a down payment will depend on your financial situation, but it’s typically at least 20% of the house’s purchase price. There are five more expenses that need to be considered by perspective home buyers.
Property Taxes
Property taxes are an expense that homeowners must account for each year. Depending on the location, the size of a house, and other factors, the cost can vary significantly. An understanding of how property taxes are calculated is important to properly budget for such expenses.
Property tax bills are typically distributed by local governments and include information about the various elements that go into determining how much tax one must pay including assessment rate and any applicable credits or exemptions. It pays to fully understand your rights as a taxpayer so that you can make sure you are not overpaying in property taxes.
Property tax rates are assessed each year. This means this is a moving tax in that it can go up or down every year.
Homeowners Insurance
It is designed to provide financial protection against serious loss if something unexpected happens, such as damage caused by storms or fires. A policy will typically cover structural damage to the building, plus liability coverage that can protect you from lawsuits if an injury were to occur while they are on your property.
Many policies also offer protection for personal belongings and any valuables kept within the home. Homeowners insurance is an important expense that should not be overlooked when buying or maintaining a property.
Other forms of home insurance may be required based on where the home is located. Examples include fire, flood, and earthquake insurance.
Maintenance Costs
A house is a long-term expense and because of that, it is important to consider all the associated costs, especially maintenance costs. While maintenance costs are usually expected in the form of repair and improvement projects, they don’t always have to be large or expensive.
Simple maintenance such as regular painting on the exterior as well as maintaining your gardens and landscaping can prevent larger problems down the road. Additionally, some decks and patios may require yearly or bi-yearly cleaning and staining to maintain their look.
Bottom line, factoring in the expense of home maintenance into your budget will help keep your house looking great, long after you move in!
Utilities
Paying utility bills can be a huge expense for a household. They are usually necessary to maintain our quality of life, whether that is keeping the lights on, the microwave running, or the water heater functioning. Not only that, but utilities help us conserve energy and protect us from environmental harm.
It’s important to always keep an eye out for ways we can reduce our utility bills with simple fixes like installing LED bulbs or checking for air leaks in our homes. With some effort and creativity, you may be able to keep your utility bills more manageable going forward.
HOA Fees
Homeowners associations (HOAs) exist around the world to provide guidelines for residents of a given subdivision. Membership in an HOA often comes with obligations, including a monthly expense known as the HOA fee. These fees cover different services and amenities associated with the house.
Examples of these may include clubhouse membership, landscaping maintenance, and security guards to keep watch over the neighborhood. As such, when buying or renting a house within an area covered by an HOA, factor in the expense of this monthly fee as part of your budget.
HOA fees are managed by a 3rd party company. HOA fees tend to rise over time. Be sure to prepare for increased HOA fees on an annual basis.
Educate yourself prior to buying a home
Buying a house is an exciting process but it’s important not to overlook any potential expense associated with owning a home. From property taxes and homeowners insurance to utilities and HOA fees, there are many costs associated with owning a home that must be taken into account when making this major life decision! Researching each expense ahead of time will help ensure that you’re prepared for everything when it comes time to finally move into your new home!