Many people consider home ownership a notable achievement. There are plenty of benefits to homeownership but there are also some downfalls. The costs associated with owning a home is one particular downfall. When you buy a home, you are responsible for all of the upkeep, maintenance, taxes, and other expenses. Surprisingly, many homeowners are unaware of the potential financial pitfalls and become blindsided later on. Let’s discuss the top 5 expenses you should know about and prepare for when you own a home.
1 – Maintenance
Your home (interior and exterior), yard, land, and appliances will require ongoing maintenance. Some of the biggest expenses associated with ongoing home maintenance are gardening and landscape expenses. Especially with homes that have a lot of land, regular weed abatement is required to reduce the risk of fire. And homes with trees that lose leaves seasonally can clog the gutters. The maintenance for the home itself can get costly too. Pretty much everything in a home has a lifespan. A few of the costlier items to repair or replace are the foundation, roof, water heater, air conditioner, and garage door. Thus, it is important to do regular maintenance inside and outside your home to help prevent unnecessary replacement of things.
2 – HOA
HOAs (homeowner associations) are usually great to have. They offer quite a few benefits, including the option to share communal expenses. HOAs usually charge each homeowner a monthly fee ranging from $200 – $400. The challenge with HOA fees is the unpredictable increase. Additionally, many communities that have an unforeseen expense may issue an assessment, which you will be required to pay. If you do not pay it, the HOA can put a lien on your home. It’s important to factor in the long term HOA fees and potential increases into your budget when you buy a home.
3 – Repairs
As a homeowner, you are responsible for all required repairs inside and outside your home. There are quite a few things that may need repairs. Some common things are the roof, garage door, appliances, HVAC system, and damages caused by insect infestation. In some cases, a full replacement may be the only remedy and that can get very costly. It is important to budget for repairs accordingly, and you may want to look into a home warranty that can cover some unforeseen repairs.
4 – Insurance
A home is usually the most expensive asset a person can own, therefore it is important to protect it adequately. Home insurance is relatively inexpensive. However, you can customize your insurance policy and add specific policy riders for additional protection, which can increase your cost significantly. For example, you may want to add flood protection if you live near a body of water or earthquake coverage if your home is in California. You can also increase your limits and insure high ticket items such as valuable art and expensive jewelry, which adds to the price of the insurance.
5 – Taxes
Unless you live in Arkansas, Kentucky, Louisiana, Mississippi, Oklahoma, Texas, or West Virginia, then you are on the hook for annual property taxes. Property tax varies from state to state however, you need to be sure to include it in your budget. You should budget for additional taxes if you are planning a property improvement that will result in an increase in your home’s value.