To determine what they can afford, buyers too often focus on mortgage payment or a home’s list price alone. Non-mortgage related costs associated with homeownership can affect the monthly bottom line, if you’re not prepared. Let’s take a look at some of the hidden costs of home ownership.
If you’re only plugging in the principle and interest rate into your mortgage calculator, you’re missing out on a huge expense right out of the gate: property taxes. You need to find out what the taxes are in advance, and that information is usually included on the MLS listing itself. Divide that number by 12 and immediately add it to your estimated monthly payment. Remember, the taxes are just going to keep going up. An increase in the first year you own your home is not impossible, so make sure you have room left in the budget to pay even more taxes.
It costs far more to insure a home than a one-bedroom apartment. So even if you had renters’ insurance, you have to increase the budget for insurance. There are a lot of factors to consider when it comes to insurance. Did you save on your mortgage by purchasing an older home? It’s going to cost more to insure it because the electrical, heating, and plumbing are older and more prone to disaster. Did you fall behind on credit card or student loan payments? Insurance companies will periodically check your credit score and alter your rates based on their concept of your risk level. Additionally, if you live in a flood zone, earthquake zone, tsunami zone, or volcano zone, you’re going to have to pay extra for hazard insurance.
First of all, if you decide to contract the lawn out, it could cost you $100 or so a month for someone to cut the lawn, plus another $100 a month for weed killer, pest control, and fertilizer. If you decide to spend on new trees, bushes, flowers, or fencing, that adds up quickly too.
If you decide to do it yourself to save money, it’s still going to cost you. You’ll have to buy a lawnmower, an edger or weed whacker, hedge trimmers, a hose, sprinkler, rake, gloves, and so forth. If you don’t have a garage big enough to store all of your new lawn gear, or have no garage at all, you now also need to buy and install a shed to house them.
You’ve got to reseal the driveway, clean and restain the deck, clean the gutters, repair and eventually replace the roof, repair any cracks in the siding, or maybe patch the front steps. On the inside, you’ve got to repair the appliances, fix any plumbing leaks, replace filters, seal your doors and windows, drain the water heater, and clean the chimney. Plus, patch the walls, replace the toilets, repaint, clean and wax the floors or replace the carpet, and regrout the bathroom. There’s no real end to the maintenance you’ll undertake with home ownership.
As a renter, if you saw a bug or a mouse in your apartment, you just called the office or landlord. When you own your own house, it’s all on you. Dealing with termites, cockroaches, mice, bats, bed bugs, and other critters costs a lot of money. Spend a couple hundred dollars for routine treatments and it will save you lot more later if you have to get the place bombed and throw out some of your furniture or replace the floor because the varmints got to it.
Before you buy a house, it’s important to figure out if you can afford all the costs of a new home. A good guideline is to not make a lot of discretionary purchases the first few years. Set aside much as you can for the unexpected expenses and wait a year or two to see how it shakes out.
Golden State Mortgage Can Help
At Golden State Mortgage, we are a California-based mortgage company. We want to help you through every step of financing your new home. Fill out the quick contact form or call Golden State Mortgage today at 1-800-536-8171 to speak with one of our California mortgage specialists and get a free good faith estimate.