The Monthly Costs of Homeownership

The Monthly Costs of Homeownership

Written by Nathan Woolard

When you think about the costs of homeownership, the most obvious consideration tends to be monthly mortgage payments.  However, there are a number of hidden expenses involved in the process that novice buyers might not see coming.  From property taxes to insurance to utilities of all kinds, it’s important to understand the various costs bound to come your way.  Here’s a list of potential expenditures to account for in your budget:

• Insurance.  Homeowners insurance is likely a less surprising expense, as banks and mortgage companies typically won’t issue a loan without it.  Remember that premiums often rise annually, or if you increase coverage in regard to the rising value of your property or possessions.
• Property taxes.  Your home is taxed on its assessed value, and this can add hundreds of dollars to your monthly payments.  Depending on where you live, you might be responsible for both city AND county property taxes, so be sure to know just how much you need to cover.
• Utilities.  If it’s your first time moving from an apartment or smaller residence into a larger home, don’t be caught off-guard; the increased square footage is sure to mark a spike in your utility bill as well.  As a renter, your landlord may have covered some or all utilities, from trash removal to water and heat, and perhaps even gas and electricity.  As a homeowner, however, you’ll find yourself responsible for all that and more.  The utility and phone or cable companies may require deposits to initially activate their services.
• Maintenance.  It may not be a regimented monthly occurrence, but you should always leave a little wiggle room in your monthly budget for upkeep and repairs.  There are countless potential maintenance costs, expected and unexpected alike:  repairing the roof and repairing appliances, sealing the driveway and sealing doors and windows, cleaning the gutters and cleaning the carpet, fixing the plumbing and fixing the heating or air conditioning.  Anything from emergency landscaping to a moldy basement can cause your bank account to take a startling hit, so always plan for those unplanned expenses, just in case of a nasty surprise.
• Pest control.  You won’t have a landlord to shoo off the bugs and rodents in your own home.  Paying for routine maintenance to keep out mice, termites, bed bugs, and the like can save you a lot of money and effort in the long run.  It may not seem like a vital expense in the moment, but when the alternative is bombing your house or replacing furniture or flooring further down the road, some preventative measures certainly seem justified.
• Safety.  It may not seem like an immediate financial concern, but as the saying goes, “safety first.”  Expenses associated with security and safety measures like putting up a fence, installing an alarm system, or adding motion-detector lights can add up.

These factors all affect the monthly costs of your home, and the best approach is simply to be prepared.  Ownership expenses are most bearable when you know what’s coming, so don’t allow yourself to purchase a larger house than necessary if it’s stretching the constrains of your budget.  By accounting for these unavoidable monthly costs ahead of time, you can lessen the burden of owning your home and set yourself up for an ever more stable financial future.