What are the hidden costs of owning a house?
We all want to own the places we live in one day. I mean, come to think of it — the rising cost of rents every year leaves you at the mercy of landlords. This is why young people look forward to signing up for a mortgage as soon as they think they can afford one.
At least, it brings a good feeling to know that you have an ownership stake in the house you live in. And for those who have enough money saved up in the bank to afford a house, there’s no reason not to grab that sweet offer today and become a homeowner within a community of your choice.
However, before you jump on that fantastic offer with the unbeatable price, you must realize that there is more to the cost of owning a house than the ‘for sale’ price you’re seeing.
When you factor in maintenance costs, roofing, tiling, plumbing, house association fees, insurance, housing taxes, pest control, furnishing, painting, etc., you’ll be shocked at how much you’ll be spending in addition to your mortgage.
You may, in fact, wind up paying more interest on the mortgage than you think. If you look at it from a homeowner’s perspective, these extra costs are not so hidden. Rather, they’re plainly obvious, and you should expect to budget for them. Some experts project 1 -2% of your mortgage balance per year.
Therefore, if you’re in the process of checking out a lovely home, you may want to pay attention to the following concerns before purchasing. These and several other not-so-noticeable concerns account for the ‘hidden costs’ of owning a house.
Property tax is one of the hidden costs of owning a house. It’s inevitable and may rise as high as 2% or more in states with high property taxes. However, property taxes vary in amount across different states, counties, and communities. Unfortunately, you have to pay for them. You may liaise with the real estate agent brokering the purchase for information on what your tax expenses will look like.
Also, you may seek professional help to re-evaluate your taxes if you think they are too high.
Homeowners Association (HOA) Fees
Note that if the house you want to buy is within a homeowners association or a condominium association, you’ll have to pay association fees. These payments usually come monthly, quarterly, or annually, depending on the residents’ decision.
Association fees are often an agreed-upon amount to be contributed by that community’s residents for maintenance purposes, security, lighting, administration, and garbage collection. The fee is subject to review from time to time and is basically intended to cater to all residents’ common necessities.
The premium payment for your mortgage is an expected expenditure. For every mortgage you take out, there’s insurance running on the property. Therefore prepare to make extra payments along with the cost of the house.
In some cases, your homeowners’ insurance payment is included in the mortgage installments. Homeowners’ insurance is mandatory if you have a mortgage on the house. Also, the insurance premiums may not cover damages like natural disasters, otherwise described as ‘acts of God.’ In such circumstances, the cost of damages caused by flooding, hurricanes, hailstorms, etc., will be borne entirely by the property owners.
In reality, homeowners’ insurance payments for places that are prone to natural disasters are higher. Homeowners’ insurance, property taxes, and mortgage payments can sometimes be bundled together in a payment system called principal, interest, taxes, and insurance (PITI).
Even if the house you want to purchase is a new one, you need to understand its electric system’s basics. Faulty wiring and electrical shocks can cause serious house accidents, hence the need to call in professionals to check that all is intact.
If you’re doing rehabilitation work in the electric wiring system, you should prepare to spend a little more in addition to the mortgage payment.
The subject of pest control sounds almost insignificant until you feel the full weight of the kind of pests that can cause havoc on your home. If this is not taken care of early enough, you may wish you had been more attentive.
Termites are attracted to moisture and wood. They can creep in through the tiniest of cracks and are capable of causing severe structural damages to your home. But you can take care of this. The best approach is to engage the services of a local pest control company. They can even give you a free inspection, and if there’s a need to beef up your house’s protection against termite invasion, they know what works best for that community.
Caring For Your Lawn
It looks so beautiful having a well-kept lawn in front of your property. But it takes some serious work to achieve that. Tending your lawn is time-consuming or can be expensive if you hire experts to do the job.
According to the 2016 National Gardening Survey conducted by the National Gardening Association, American households spent a whopping $36.9 billion on lawn care and gardening the same year.
Indeed, the fees of hiring an expert can add up fast if you use them consistently. Unfortunately, it’s one of the ‘unattractive perks’ of being a homeowner.
Do not forget that the real estate agents take a commission for their troubles. Of course, this is not a hidden charge, but it is almost always paid by the seller. Generally, you can budget 5-6% of the home’s cost as the fee for most realtors, upon the sale of your home. But this varies widely since all houses are not the same, and location determines the price.
It’s fulfilling to own a house. But in almost all circumstances, you’ll wind up spending way more than you budgeted for the purchase. These are some of the hidden costs of owning a house. So, it’s important to factor in the essential background fees and payments you will have to deal with besides your house’s actual cost.