06.25.15 by Jeff Johnson
When most people — particularly first-time home buyers — think about the costs associated with purchasing a home, they typically consider the costs related to closing on the deal. These closing costs include mortgage, title and insurance fees. However, extra or hidden costs of homeownership are often the most stressful part about owning a home.
Beyond principal and interest
If you’re only calculating mortgage principal and interest, then you could be underestimating the actual cost of homeownership. That’s because property taxes and homeowners insurance are added to the monthly payment as well. Additionally, while you pay utilities as a renter, if you’re moving into a bigger house, your heat, air conditioning, and electric bills will likely increase.
Home maintenance is another common expense many buyers overlook. You can’t call your landlord to fix problems once you own a home. Remember to budget for tools and equipment required for yard care and home repairs. A home left unrepaired will quickly deteriorate and lose value. Water leaks or intrusion are especially damaging and important to fix quickly.
And if you are moving to a rural home, expect a septic system and well water. Each of these requires regular maintenance and expenses.
Use your inspection to make a plan
As a part of your home buying due diligence, understand from the property inspector what is required to maintain the home. Most buyers think that the inspection is all about finding faults or issues with the property. While poking holes in the home is certainly one aspect of inspecting, what’s just as important is having the opportunity to learn about the home and its systems.
Use the walkthrough with a licensed inspector and the written report to identify what home improvement issues you will face. Budget and plan for a two-, three- or five-year plan to address issues like a leaky water heater, energy-inefficient single pane windows or a boiler near the end of its usable life. Other long term maintenance to plan for is a new roof and painting.
— Inspiration: Zillow Blog