Hidden Costs of Owning a Home
A realistic look at the extra costs first-time buyers need to budget for beyond the monthly mortgage payment.
Introduction
Many first-time home buyers focus only on the mortgage payment, but owning a home comes with many additional costs that renters often do not think about.
Understanding the hidden costs of owning a home is important so you can budget properly and avoid financial stress after buying a home.
Common Hidden Costs
- Property taxes
- Homeowners insurance
- Repairs
- Maintenance
- Utilities
- HOA fees
- Appliances
- Lawn care
- Pest control
- Major repairs such as roof replacement or HVAC replacement
Maintenance Rule of Thumb
A good rule of thumb is to budget about 1% of the home value per year for maintenance and repairs.
| Home Value | Suggested Annual Maintenance Budget |
|---|---|
| $150,000 | $1,500 per year |
Other Upfront and Transition Costs
- Closing costs of about 2% to 5% of the home price
- Inspections
- Appraisals
- Moving expenses
- Furniture or appliances
Final Thoughts
Owning a home can be a great investment, but it is important to plan for all the hidden costs before buying.
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