Many home buyers are excited at the prospect of owning their first home. They figure out how much they can afford and the monthly mortgage payments. A common mistake of homeowners is viewing mortgage payments as the only cost associated with home ownership. Owning a home has many hidden costs. Understanding these costs helps to create an accurate budget. Here are four costs that perspective homeowners need to consider when buying a home.
Mortgage lenders require homeowners to purchase home insurance. Insurance is a way for the lender and homeowner to protect their investments. These insurance policies can be expensive. The costs of the policy are affected by the home’s location and amenities. Needing policies that require special coverage, like flood coverage, will increase the cost of insurance. It should also be noted that the costs of insurance is guaranteed to increase over time.
Maintenance costs are something that renters take for granted. If anything in the unit needed repair, it was covered under the renter’s agreement. Home maintenance can include updating electrical wiring, gutter cleaning and plumbing repairs. Again, the nature and frequency of the required maintenance can have an effect on costs. Regular maintenance, like lawn care, can increase the monthly costs of owning a home. Sometimes surprise events can occur. For example, maybe the pool heater needs to get repaired before using it. Maintenance costs can be pricey, but they save money in the long run.
Anyone moving from an apartment to a home may find that they are moving into a larger space. While an increase in space is good, it also means needing more furniture. Furnishing a new home can be pricey. One of the best ways to save on costs is by furnishing the house over time. Comparison shopping and waiting for good deals is one way to spend less money on furnishings.
There may be an increase in utility costs for first time home buyers. It may take a few months to get a good estimate on some of the costs for utilities like gas, water and electric. There may also be seasonal cost fluctuations. The monthly utility cost also depends on frequency of usage. The cost of telephone, internet and cable services is something else that needs to be calculated into the cost of home ownership.
The monthly costs of owning a home extends beyond mortgage payments. Unfortunately, many first-time home buyers are blindsided by this fact. Monthly costs associated with owning a home also include utilities, maintenance and repair costs. Understanding that there will be extra costs can limit the amount of surprises that can break a budget. Feel free to discuss costs you can expect for homeownership from any of Hamilton-Franklin’s Professional Associates.