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What Are the Costs of Homeownership?
You have the down payment for your new home, you’re ready to start looking for the perfect house, but have you considering the other costs that come with owning a home? Homeownership can be a smart long-term move to build wealth. However, once you buy a house, there are additional costs to consider you should be prepared for on top of your monthly mortgage payment.
Here’s a look at some of the average costs associated with owning a home.
Mortgage Payment
Unless you’re paying for your new home in cash, you can expect that for the foreseeable future, your monthly mortgage payment will be a substantial part of your budget. Your monthly payments are based on the amount of the loan (the principal) and the amount you pay to borrow the money (interest).
Use our mortgage calculator to see what your monthly mortgage payment may look like
Property Taxes
Property taxes on your home are paid every year and the amount can vary depending on where your home is located. If you have a mortgage, your property taxes are commonly paid in monthly installments to your lender, the funds will be placed into escrow, and used to pay your tax bill when it is due.
Homeowners’ Insurance
Most lenders will require you to have and maintain a homeowners’ insurance policy on your home. Homeowners’ insurance can cover you in the event of something unexpected happens to your home or property. Like property taxes, it’s usually paid monthly in installments to your lender, put into escrow, and paid when the bill is due.
Important to note: There are some things that basic homeowners’ policies don’t cover, such as floods. If your property is in a flood zone, you may be required by your lender to obtain a separate flood insurance policy.
Homeowner Association (HOA) Fees
HOA fees, or Homeowner Association fees, are usually paid monthly or quarterly and assessed by the homeowners’ association to pay for the services it provides. The HOA uses the money it collects to help maintain or improve the quality of life in the community such as landscaping and maintenance of the grounds, snow removal, trash removal, and pest control.
These fees are paid on top of your mortgage, property tax, and homeowners insurance payments. Even if your mortgage is paid off, you’ll have to continue paying HOA fees.
Utilities
The cost of utilities can vary depending on where you live, the size of your house, and usage. Typically, utilities include electricity, water, and gas bills, but also include sewage, trash, and recycling, as well as TV, and internet.
Home Maintenance
Once you’re a homeowner, you will be responsible for any repairs to the home which can include, but are not limited to, the roof, plumbing, HVAC, electricity, appliances, etc. These costs can add and having an emergency fund in place can help when those unexpected and expensive issues come up.
Budget and Save
Once you get pre-approved and know how much you can spend for your new home, you should also factor in the ongoing costs you can expect to pay when you buy the home. By doing this step, you’ll know what expenses to expect to help you budget and save.
And you can always learn more about your options by talking with one of our experienced loan officer at (855) 233-9749 or get started online.
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