Do You Know What It Really Costs to Be a Homeowner?
Owning your very own home has its advantages, but it also comes with big financial responsibilities. While most people are generally aware of real estate costs like mortgage payments and the initial down payment that come along with owning a home, there are other costs that are a little less obvious. It is in your best interest to become familiar with these different homeowner expenses so that you’re well prepared to budget for them upon taking up the responsibilities of a homeowner.
For as long as you own your home, expect to pay property taxes. These taxes are based around the value of your home and can change over time depending on its increase or decrease in value. These property taxes vary depending on your region and are paid to a national government, a federated state, a county, or a municipality.
Your interest rate on your mortgage is calculated based on how many years it takes you to pay back your loan and the frequency of payments. Interest rates vary based on the type of loan you have (primary loans, secondary loans, home equity loans, credit lines, etc.) and can be tax deductible. If you’re looking for a good mortgage rate, read Tips on Shopping for the Best Mortgage Rates.
Homeowners insurance protects you from any damage done to your home, and protects you from being legally responsible for any injuries acquired on your property. This insurance also covers any damage caused by members of your family or household pets. Upon dealing with the seemingly endless list of costs that come along with being a homeowner, the added expense of home insurance may seem unnecessary– but that’s not the case. There’s no way for you to predict the natural disasters or freak accidents that may occur in your home– protect yourself from paying way more in the long run.
Homeowners Association Fees
The Homeowners Association (HOA) fee covers external building maintenance and landscaping costs for common areas. Typically, HOA fees exist in complexes like condominiums and town homes. These fees don’t cover maintenance within an individual unit, just shared areas like a communal garden, parking garage, or swimming pool.
General Home Maintenance
While you may not be planning a full remodel of your home, there are plenty of maintenance costs that can really add up. General plumbing or electrical repairs and yard maintenance can cost quite a bit, so it’s important to budget for such things upon moving into your home. As a rule, it’s safe to set aside the equivalent of 1% of your home’s value to use for maintaining your home annually. Depending on the intricacies of your front and back yard, budget for weekly or monthly maintenance accordingly.
If you already own a home, do you have any advice for our new and potential homeowners on how you budget your home costs? Let us know in the comments below.