11 Hidden Costs of Owning a Home

I have been in Real Estate for 10 yrs +. Over the years I have recognized that people get flustered buying a home for the first time and not recognizing all the hidden costs that come out either during the closing or even before hand. I wanted to share some of the hidden costs of owning a home, in hoping that people will read this and become more educated before taking the step in buying a home. 

Inspection and Appraisal Fees
Before you purchase a home, you need to pay for a home inspection, an appraisal and perhaps additional inspections for pest or radon. The costs of these inspections are borne by buyers and are a necessary protection to avoid buying a flawed property or paying too much.

Closing Costs
Some buyers are able to negotiate with the seller for a contribution for these costs, but buyers need to be prepared with the cash for anywhere from 2% to 4% for the mortgage balance depending on your area.

Taxes
As a homeowner, you'll need to pay property taxes, which are generally part of the escrow you pay into each month. Remember, even if you have a fixed-rate home loan, your property taxes could go up and increase your monthly housing costs.

Insurance
Your lender will require home insurance, which could be costly depending on a variety of factors including the construction materials of your home and the location. Even if you have renter's insurance, you'll find that home insurance costs more because you are paying for the ability to rebuild your home in addition to replacing your personal possessions. Insurance costs can also rise over time, and you may need supplemental insurance if you live in a flood or earthquake zone.

HOA and Condo Fees
If you buy a home within a homeowner's association or a condominium association, you'll be required to pay a monthly or quarterly fee. These fees can rise, or your association may need to charge a special assessment for projects such as repaving the parking lot or repairing a roof.

Moving Costs
Not only will you need to pay a moving company or rent a truck to move your belongings, but you may need to make deposits to start your utilities.

Utility Bills
Depending on where you live now, your costs for electricity, gas and water could be higher when you move into your own home. you may also need to pay for garbage collection along with your Internet, cable and phone bill.

Furniture and Decorative Items
While this is essentially a discretionary expense, most people who move from a small apartment to a larger home need to buy at least some new furniture. You can keep your expenses in this category in check by waiting for a year or two to buy extra things and carefully comparing prices before any big purchases.

Lawn Care
Whether you handle your yard work yourself or hire a professional, you will have to pay something to keep your landscaping in check. Lawn equipment can be costly and, if you have a lot of land, you may need items such as a snow blower or a leaf blower, too.

Maintenance
Interior home maintenance costs both time and money. While you may be able to change your furnace filters, clean your gutters and keep your appliances running smoothly yourself, you may also need to hire a contractor to clean and inspect your chimney and to keep your heating and air conditioning system in top shape.

Repairs
While maintenance tasks can be predictable, the most costly part of homeownership typically comes with unexpected repairs such as replacing or repairing the roof, fixing loose times in the shower, removing an overgrown or dead tree, or paying for mold mitigation in a damp basement. The list of possibilities is endless, so the best thing homeowners can do is to set aside savings for an emergency. Some financial experts suggest budgeting for 1% or 2% of your mortgage balance as a yearly maintenance and repair fund, but the amount you save depends on the age, condition and size of your home.

The Bottom Line
While buying a home may cost a little more than you think, the investment in property can still be worthwhile as long as you buy what you can afford, budget for expected and unexpected expenses and hole onto your home for at least seven to 10 years.

But don't let the hidden costs scare you. As long as you have a Real Estate Agent to guide you through the process you shouldn't have any costs that you didn't know about ahead of time. That is what Real Estate Agents are supposed to do for you!