Many people overlook some of the costs that come with home ownership. It is always important to factor in all the costs before buying a home. The following are the key expenses associated with owning a house.
Buying a house is expensive and most people will at least require a mortgage to secure a house. This means you will have to make monthly mortgage payments to the lender to pay off the mortgage. A part of the monthly payment is the principal and the rest is the interest on the loan.
Property taxes are charged by local governments and are determined on an annual basis. They will vary based on the value of the home among other factors such as the state, county or school district the house is in. Remember most of the time property taxes will increase as the value of your home increases. Make sure to create an adequate provision in your budget for property taxes.
Homeowner’s insurance is a mandatory requirement from a majority of lenders. It protects your house from fire and other risks. The amount of insurance you pay depends on various factors such as the age of the house, the location and size of the house.
Repairs and maintenance expenses are often overlooked by home buyers. This expense is a recurring expense you are likely to incur each year. A fresh coat of paint, roof repairs, plumbing or lighting repairs are all your responsibilities as the owner of the house. As a general rule it is estimated that home owners spend about 1-2% of the total value of their home annually on repairs and maintenance.
Based on the fact that most house ownership expenses are ‘’hidden” it is prudent that you take a holistic approach to house ownership before you begin the process of buying one. Assess carefully the financial implications of owning your house and how they impact your future goals.