Hidden Costs of Home Ownership
Six Hidden Costs of Home Ownership
You might have read it in the newspapers, or seen it on an advertisement “owning is cheaper than renting!” It is – but not really – not when you take the hidden costs into account. I strongly believe in home ownership for individuals, families and communities yet it’s important for you to be prepared for these ownership costs in addition to your mortgage.
1) While most people are aware of property taxes, perhaps you were unaware that your property taxes can go up, as well as down. In recent years, millions of people have petitioned local property tax boards to lower their taxes. When property values go up significantly, you could in fact be re-assessed at the higher value. I recently saw this occur with my parent’s home in Carlsbad. They were absolutely stunned!
2) When your rent a home, you generally don’t pay the utility bills for gas, water, landscaping, and trash removal. When you own, the costs for these items becomes yours. In addition, if you purchase a single family home, you will need a comprehensive insurance bundle on the home. When buying, ask the sellers for an estimate of what these utilities are costing them so you can budget appropriately.
I frequently hear buyers complain about hoa fees. Most forget however, that these fees are the very ones that the hoa fee covers.
3) I don’t care if you purchased a brand new home, there are always unexpected repairs. It may be something simple as a plumbing leak or as complicated as a crack in the slab. The only way I know to prepare for the eventuality of break-downs and repairs is to have a savings account ready for any possibility.
More than once, I’ve taken a buyer home shopping only to learn that once they buy the home, they won’t have any money left. To that I say “absolutely not.” You should not be buying if that’s the situation.
I strongly advise you to have a minimum of 10,000 in an account just for the house and its needs, and add to it every year that you’re in the house. After all, the longer you live there, the more likely that major repairs will be needed.
4) Just as utility fees go up every year, so do your HOA fees if you own a property in a development. This is something you can plan for carefully when you buy but as with any home, things can change years down the line. It is wise to become involved in the HOA of your home community, get to know the players, and monitor the costs involved of running the development well. If nothing else, you will be more knowledgeable and prepared if problems are coming down the pike. One last thing about HOA Fees…quite simply, they do go up almost every year!
5) We’ve just discussed HOA fees but how about HOA assessments? Simply put, these are for additional fees levied for major repairs needed for the entire community. They are used when there is not enough money in the HOA budget to cover the property’s needs. Common uses for an HOA assessment include new roofing, plumbing repairs, roads, and walkways. Again, by being involved with your HOA, you will be more up-to date- and have more influence over the big decisions pertaining to your home.
6) Last but not least, maintenance. Just as your car, your physical body, your possessions all need maintenance – so too, does your home. When you were renting, you probably didn’t think twice about this !
Maintenance of your home includes such things as cleaning inside and out, managing termites, keeping up your lawn, cleaning out the gutters on your roof, and so on. On top of that, most homeowners tend to repaint from time to time, or make small upgrades as they go, whether it’s fresh flooring, appliances, or countertops. Part of the joy of owning a home is that you can do what you want with it!
When you are shopping for a home, you can instantly tell as you walk in whether the home has been well maintained. Those that have been taken care of offer the greatest value when re-selling and will sell more quickly.
So, it’s great to buy a home – just know that in reality, there are a number of costs that go over and above renting. Be prepared, financially, as well as with your time, to devote some of your life to your home.