Now that you’ve found your dream home and made an offer, there are quite a few expenses that come after. We’re talking a long laundry list of costs.
Did you know that the average American pays around $9,000 in homeowner costs? Of course, this varies depending on location. But what’s for certain is that the hidden and unexpected expenses can add up over time.
Keep reading to find out more about the overlooked cost of home ownership.
1. Property Tax
One expense that many new homeowners underestimate is property tax. When calculating mortgage payments, it’s essential to add property taxes. This is paid separately, but it’s sometimes amortized over the course of the year.
The cost of property tax varies by state, and they tend to increase or decrease based on city and ordinance. The Tax Foundation data lookup tool gives you an estimate of how much property tax you would have to pay.
2. Homeowners Insurance
Another overlooked expense of owning a home is homeowners insurance. If you’re getting a mortgage, you will be required to get homeowners insurance. Even if you pay for your home in cash, you will still need it.
Homeowners insurance covers the cost of replacing items that get stolen or damaged. The average annual premium for homeowner insurance is $1,130. However, you may get a better deal if you shop around.
3. Closing Costs
As you close on your mortgage, there are many other expenses to be paid. Closing costs for a home are typically 2 to 5 percent of the total cost of the home. Sometimes the closing cost is as high as 10 percent of the home’s value.
4. Home Maintenance
Even if you had your home build from the ground up, you would need to dedicate a spending budget for maintenance and upkeep. You should plan to pay at least 1 to 2 percent of the value of your home every year.
Home maintenance includes house cleaning, gutter cleaning, pressure washing, and water heater replacement. The cost of hiring contractors like an installation company may vary.
Utilities cost for a home can be almost as expensive as property taxes. Homeowners can expect to pay over a few hundred dollars on utilities. Not to mention, estimates vary depending on location and climate.
Utility cost also includes relocation or transfer fees from your old place to your new home. Some companies may waive this fee under certain circumstances but, for the most part, expect to pay for relocation requests.
6. Home Inspections
Once your offer on a home gets accepted, the next step is to get a home inspection. Often you may need more than one inspection. This can add up to over a few thousand dollars. A positive is that if the home requires a lot of repairs and maintenance, you could renegotiate with the seller.
Are You Ready for the Cost of Home Ownership?
Although owning a home is generally cheaper than renting, it is very expensive. When looking for a home, be sure to factor in the cost of home ownership and budget accordingly.
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