Hidden Costs of Homeownership

Before you take the plunge and purchase your dream home, you’ll want to take an honest look at the realities of homeownership and what that perfect place will truly cost. Being realistic about affordability will help prepare you to make smart decisions as you gradually become a homeowning expert.

Maintenance
General upkeep of your home can take a big bite out of your budget if you were previously renting and didn’t have to plan for such expenses. Be sure to think about recurring costs like lawn care and furnace inspections as well as less frequent expenses like roof repair or window replacement.

Some experts use a 1 percent rule, saying that over 10 years of homeownership you can expect to pay an average of 1 percent annually on maintenance costs. That means a $250,000 home might need around $2,500 per year in maintenance.

Improvements
You may have grand plans to make your new home your own, but those improvements can come with hefty price tags. You’ll find smaller DIY projects like fresh paint or new light fixtures more manageable as you save for bigger remodeling dreams.

If you do plan to make any major improvements immediately, be sure to include those costs when looking at your budget and planning for your down payment.

Unexpected Repairs
Unlike an exciting remodeling project you can plan for, an unexpected repair is something that appears suddenly and must be dealt with—ready or not.

It’s a good idea to set aside some savings for potential issues such as a leaky roof, cracked window or burst pipe. An unexpected repair is no fun but being as prepared as possible (that means having funds on hand to cover costs) will make it less stressful.

Furniture & Decorations
If you’re moving into a larger space than your previous residence, you may want to purchase new furniture and update your décor.

While this type of expense can be one of the more fun aspects of homeownership, it can still add up, so be prepared for what’s realistic to spend on that new sofa.

Utilities
A larger home footprint also comes with increased utility costs. Heating, air conditioning, water and electricity are all standard, but also think about other necessities like internet and TV subscriptions.

Keep costs under control, and help the environment, by keeping the thermostat at a moderate temperature, loading the dishwasher efficiently, and shutting off electronics when they aren’t in use.

Membership Fees
Depending on the type of property you purchase, you may need to budget for HOA (Homeowners Association) or condo fees.

HOA fees go toward the upkeep of the neighborhood while condo fees are paid to maintain the building, amenities and shared areas. There’s a wide range in the cost of these fees, but it’s usually at least a couple hundred dollars per month.