Hidden Costs of Homeownership

Posted in: I'm Moving, Buying & Selling a Home, Money Saving

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My husband and I are currently looking to buy a home in Chicago (we know right where to find move help in Chicagoland)) and it’s been one heck of an emotional roller coaster. Excitement, fear, anxiety…let’s just say that making this big purchase is a bumpy ride.

While we have many must-haves for our new pad (2 bedrooms, quiet neighborhood, close to public transportation), by far the biggest factor is our BUDGET. Lucky for me, my husband works in finance so he is leading the charge when it comes to figuring out how much home we can afford.

But since starting the home buying process, I’ve realized that there is far more that goes into your monthly payment than the sticker price on a particular home. I often get super excited when I see the price of a dreamy space, and then once I look more closely at the numbers I soon realize that it is well above our budget.

So if you’re in the home-buying boat like me, then you may want to take a look at the HIDDEN costs of homeownership. Be sure to take all of these additional numbers into account when making this big financial decision.

Initial Home Costs…Initial Home Costs - Appraisal, Inspection, etc.

The first few months of being a homeowner are often the priciest! Here are some additional costs that may come your way once you find your home sweet home.

  • Inspection: A professional inspection is a crucial step when buying a home. You’ll want to know exactly what you’re getting yourself into, and hiring a pro is your best bet. This can cost several hundred dollars, and is usually something you do before closing.
  • Appraisal Fees: A lender will only approve a loan for a property that appraises for the full sales price of the home (or more). Your lender will choose an appraiser to evaluate your home and you’ll pay the fee which will cost around $300-$400.
  • Closing Costs: When you sign your closing documents, you’ll be hit with additional fees known as closing costs. These usually run anywhere from 2-3% of the mortgage loan amount.
  • Moving: Even if you follow these 10 frugal moving tips and you plan to HireAHelper (because you’re making a Hybrid Move, of course… right?), there will still be some sort of cost that comes with moving your stuff from point A to point B.
  • New Furniture/Decor/Paint: Chances are you’ll want to spruce up your new home! Keep some wiggle room in your budget to account for some new home purchases.

 

Forever Payments…Forever Payments - HOA, Property Taxes

You’re going to be paying more than just your mortgage payments. Here are some other regular costs to consider.

  • Monthly HOA: If you buy in a certain development or neighborhood, you may have monthly HOA fees. These often cover costs to maintain common areas and cover fees associated with snow removal or lawn maintenance.
  • Property Taxes: This bill comes once a year, therefore it can be easy to overlook during the home planning stages. Factor in these yearly costs when you’re looking for a home and you won’t be surprised come tax time. The property tax is often listed on MLS and you can divide it by 12 and add it to your monthly mortgage payment.
  • Homeowners Insurance: Homeowner’s insurance costs a heck of a lot more than renter’s insurance. Be sure to add this cost to your monthly budget.
  • Utilities: You gotta keep the water running and the house warm somehow! When looking at homes, you may want to ask the current tenants for an example of an average utility payment.

Every Once in Awhile…

Tools for Your New Home ProjectsBad things happen, and you’ll need to be prepared for any rainy day expenses.

  • Ongoing Maintenance & Repairs: There’s no landlord to call if things break, now it’s up to you to fix them! Lawn care, heating and cooling maintenance, and working appliances are just a few of the many areas that require maintenance in a home.
  • Pest Control: Bugs, termites, and mice…oh my! Keep them away with regular visits from your local pest control.
  • Safety: Installing alarms, security systems, and smoke detectors may not be the most exciting DIY projects…but they’re definitely important ones!

 

All of the above costs are very helpful when it comes to figuring out a price and budget that is right for you and your family. But there is still the biggest hidden cost of all….YOUR TIME. Time = money and you better believe that you’ll be spending many days working on your new pad. When you’re a homeowner, you’ll be spending lots of your free time working on your house to make it the best it can be. And to me, that sounds like money and time well spent.

So what did I miss? Any other hidden costs of being a homeowner we should add to the list?

 

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