You’ve taken a hard look at your budget and your income, and you’ve determined how much house you can afford. You’ve done the math, and you’re ready to buy. But are you sure you know how much it really costs to own a home?
After the purchase price of your house, there are other factors to consider in the overall cost of owning a home. Consider these five costs that most buyers forget and avoid a few unpleasant surprises later.
- Insurance and Deductible
Owning a home is more than the loan the lender writes for you. If you have a mortgage, you’ll be required to carry homeowner’s insurance. You should shop around to find the best price for the coverage you need. This will determine your monthly premiums.
While you’re purchasing insurance, don’t forget to think about the cost of a deductible if you ever need to use your insurance. The higher the deductible, the lower the premium, but you’ll need to make sure it’s a deductible you’re comfortable paying if you need to make a claim on your insurance.
- Property Taxes
If the home you purchase is a primary residence, you’ll qualify for homestead exemption in Florida and will be able to lower your costs. But no matter what you type of home you purchase, property taxes are a reality. Find out what the taxes have historically been on the property in order to factor the cost into your budget. Most homeowners pay insurance and taxes as part of their monthly mortgage. For budgeting purposes, this is an excellent option so you know exactly what you need to pay each month. Just remember, both your taxes and your insurance can go up each year – sometimes a little, sometimes a lot.
- Home Maintenance and Repairs
The most forgotten costs of owning a home often come in the form of maintenance and repairs. When the roof goes bad or a leak develops in the kitchen, you’ll be the one responsible for the repairs. A home warranty can help control these costs and is like an insurance policy for parts of your home. Either way you go, you’ll want to factor the cost of upkeep and repair into your overall budget and set aside money to take care of these things as they happen.
- Homeowner/Condo Association Fees
Fees to a homeowner or condo association, known as HOA or COA fees, should be disclosed with any listing but it helps to know about them before you start looking around. HOA and COA fees can add a couple hundred up to more than a thousand dollars to your monthly housing costs. Find out what is included in the fees to know if other expenses may be covered by the HOA or COA. Some fees that may be included are trash pick-up, water, sewer, insurance on parts of the building, and amenities to those living in the neighborhood or building. Depending on what the HOA or COA covers, you may be able to save on costs elsewhere.
- Garbage/Sewer/Water
If you’ve been renting for a while, you may not have had to pay these expenses separately from your monthly rent. Depending on where you’re looking to buy, you’ll need to be aware of these additional costs of ownership. Every area is different and the costs could change based on the size of your home and your family, as each household will use water differently and have their own costs. Consider contacting the local utility company to determine average costs in your area and what fees will be included in your monthly waste collection or water bill.
Determining the costs for owning a home is not as simple as deciding the amount of home you can afford. Ask any owner, and they can share a laundry list of other costs that come with the territory. If you budget and plan accordingly, and buy with realistic expectations of the costs, you can avoid a lot of surprises later. Don’t let the additional costs scare you off. Just be prepared and know what to expect.
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