10 Hidden Home Expenses Too Many People Overlook
Purchasing a home comes with many expenses. Whether you live in a healthy housing market or home prices are continuing to drop in your area, you already know you will have to factor in the cost of your mortgage when considering which home to buy. Using a Home Affordability Calculator can help you get started when calculating a mortgage. But there are additional factors you need to consider when determining what you can actually afford, as well.
In addition to your mortgage and other monthly expenses, many people overlook additional guaranteed or potential costs associated with owning a home. Be sure to consider these 10 hidden home expenses.
You will need to factor in the cost of taxes when considering whether you can afford a home. You might be able to afford to pay $2,000 per month if you are renting. But when you purchase a home you will also have to factor in property taxes when you are considering how much you can afford. Taxes will vary depending on where you live, so using a Property Tax Calculator can help you get a rough idea of what you might pay. Your real estate agent can help calculate what you will pay for your home and taxes each month.
2. Private mortgage insurance
If you can pay for your home outright, or put at least 20% in as a down payment, you probably won’t need to worry about private mortgage insurance. However, many borrowers need to get private mortgage insurance because lenders want to be protected if a homeowner can’t pay the mortgage. Your credit score and down payment amount can affect the cost.
Renter’s insurance is usually cheap compared to homeowner’s insurance, so if you previously rented, you might be shocked by the cost of homeowner’s insurance. Even if you owned a home previously, it’s still a good idea to get an insurance quote for any potential home you are considering purchasing. Risky structural or design elements, potential dangers (dogs, for example), a home business, luxury items, and your neighborhood can all increase the cost of your home insurance.
4. Utility bills
Unless you previously rented and utilities were included in your monthly rent, you probably are used to paying your utility bills. Utility costs change during the year depending on the weather, but it’s also important to remember they can change if you purchase a large or an older home. If you purchase a home that is much bigger than your previous place, then your monthly bills might increase significantly. You can ask your real estate agent to request recent utility bills from the seller before you purchase a home in order to make an educated decision.
5. Homeowners associations
Homeowners associations add extra fees. There are many obvious advantages to owning a condo or town home, and low maintenance is often the biggest one. Many associations also include a gym, pool, or other activities. However, check the cost of the HOAs, as they can be several hundred dollars. It’s also important to check whether there are HOA fees if you are purchasing a home. HOAs can also regulate the way your home looks, including your shingles, fence, trees, lawns, weeds, mailboxes, garage and shed, outdoor lighting, and even your pets.
If you’re purchasing your home during the winter months, be sure to consider the cost of landscaping. If the yard is in complete disarray and you can’t see because everything is covered in snow, then you might not realize just how much money you’re going to have to shell out. Some new homes also come without landscaping. And as much fun as a blank slate can be, it’s also costly. Even if you are looking during the spring or summer months, it’s still a good idea to get a landscaping quote if the yard needs work.
7. Old appliances
Old homes might have old appliances. Even if the home you like is 20 years old or newer, you still should consider the cost of replacing old appliances. You might get lucky if you simply have to repair an appliance, but even that can cost a few hundred dollars. If you need to replace an appliance, you will need to pay for installation in addition to the cost of the appliance. According to HomeAdvisor, the brand and quality will affect the cost, as well as the size and energy efficiency.
If the appliances in the home are old, you need to factor in at least a few extra hundred dollars (and possibly several thousand if you have to replace many things). You can also request that the seller purchase a home warranty for you (or purchase one yourself). But not everyone agrees about whether these warranties are effective in all situations.
8. Other items that need to be replaced
Appliances are not the only (or even the most expensive) cost to consider. If the roof is old, you will need to replace (or fix) it, or risk adding water damage to the other costs you face when owning a home. According to HomeAdvisor, the average homeowner spends about $6,600 to replace a roof. But the size of the roof, the pitch, type of application, materials, number of layers, where you live, the code requirements, and elements of your specific home can all affect the price.
There are other major repairs to consider, as well. New siding, replacing the driveway or garage door, refinishing or replacing wood floors, and replacing carpet will add even more costs.
Moving to a new home can mean purchasing new items, such as curtains and furniture. If you lived in a furnished apartment, you might need to purchase all new furniture. The bigger home you buy, the more furniture you might need to purchase. Tables, beds, and couches can add up to several thousand dollars. If you really want your home to look polished and you decide to pay a professional decorator, you will also need to pay for that. New paint is another cost to consider.
10. Room renovations
In addition to replacing new appliances or purchasing new furniture, if you have to complete a full renovation you definitely need to count the cost when you are considering how much you can truly afford. Even if a home is priced as a steal, if you can’t move in until you renovate several rooms, then it might not be a great deal after all. Kitchen renovations can be especially expensive — the average cost is $20,474. Bathrooms can be expensive, as well, and even a bedroom renovation can cost you.