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Becoming a homeowner is a big responsibility, and in many cases, it’s a life-changing one too. There are the physical responsibilities of cleaning, organizing, and maintaining the property to make it look and feel the best it can be. And then there are the financial responsibilities.
The “sticker price” as they call it, of home ownership doesn’t reflect the true total cost of ownership, and neither do mortgages, which can often amount to much more when you consider operations, insurance, utilities, bond registration, home decor, and more.
If you’re considering becoming a homeowner, it's important to look at the full picture of what that responsibility might look like financially.
In this blog post, we’ll look at a comprehensive list of homeownership costs to consider when contemplating the investment of real estate. From the cost of the property itself to the many components of home organization and improvement, this list has you covered.
Homeownership Costs You Need To Know About
Purchasing a home can come with a number of unexpected or hidden costs. In fact, in the US, hidden costs of homeownership add up to an average of $15,000 per year per household. But by educating yourself on what these costs are, you can avoid being ambushed by expenses.
1. Homeowner insurance
Homeowner insurance is a crucial aspect of home ownership costs that can rack up under your nose. This kind of insurance is almost always compulsory if your property is mortgaged.
Without insurance, you’ll be vulnerable to covering the full might of costs that develop due to unexpected disasters or misfortunes. And even though it can be expensive, it’s much cheaper in the end than having to fork out millions to fix major structural damage on your own.
The average cost of homeowner insurance in the US is $1,500 per year. And it generally covers a wide variety of potential damages, including:
Fire
Floods
Earthquakes
Hurricanes
Malicious damage and break-ins
Bursting or overflowing geysers
Falling trees
Spontaneous combustion
Gas leaks
The list goes on, depending on the type of insurance you buy and what the immediate risks are to your property within its respective region. It is always a good idea to study your insurance packages thoroughly in order to avoid misunderstandings about what they cover.
2. Property taxes
Property taxes are another major cost that can take you by surprise. In the US, property tax sits at around 1.1% of the overall home value. So the more valuable your home is, the more you will be required to pay in taxes per year. And if your home increases in value, as just about all properties do, this tax can increase accordingly.
3. Utilities
In the US, the average homeowner can spend anywhere between $4,400 and $5,000 per month on utilities. These help to keep the property running. Utilities can include things such as:
Water
Heating and cooling
Electricity
Gas
Waste management
Recycling
Sewerage
Landline phone
WiFi
Altogether, these utilities come to around $350 or $500 per month, depending on the size of the property and the level of consumption. The more people living in the home, the more this cost tends to increase, making it a pretty costly aspect of home ownership. So, if you’re planning on expanding your family or having long-term guests, consider their extra use of your utilities and the costs that accompany this.
4. Maintenance costs
Even properties in the best condition require maintenance on a regular basis. After all, that’s how they stay in great condition! Pest control, safety checks, cleaning, garbage disposal, asset repairs, gardening, landscaping, and wear-and-tear fixes all fall into this important category.
Keeping an emergency fund for covering maintenance costs is essential for any homeowner. If you decide to rent your home out to tenants, this becomes even more important.
Once you have paying tenants, you could run into legal trouble if you’re not able to fix structural issues, address plumbing and electrical problems, or get rid of pests. But either way, a maintenance fund will provide the necessary value and security to your home ownership journey.
Maintaining your home also increases its value in the long term. If you’re considering selling in the future, keeping your home well-maintained makes it an attractive proposition to generate a greater number of real estate leads. This will likely lead to a quicker sale at a competitive price.
5. Furniture, renovation, and home beautification
When all the practical and legal aspects of home ownership have been accounted for, you’re still left with an empty home. That’s where furniture, decor, renovations, and home beautification come in. Essentially, turning a house into a home.
This part of the homeownership responsibility can include investing in space-appropriate furniture items such as sofas, beds, cupboards, tables, and other miscellaneous items, as well as decor that lifts the appearance of the home and gives it depth, life, and personality.
As a homeowner, you may also be required to invest in storage units and other elements, which make it easy for either yourself or tenants to secure their belongings.
Painting the walls, installing lighting fixtures, and selecting the best home appliances possible also fall into this category, all of which can be costly without financial boundaries in place.
Setting and sticking to a budget is one of the best ways to avoid spending too much money, particularly when it comes to home improvements, which are renowned for quickly growing expenses. Make sure to set a budget before you start the process of decorating your home.
Final Thoughts
There’s a lot more to homeownership than what meets the eye. At face value, it can look like a big lump sum, a few months of home sprucing and organization, and a touch of maintenance here and there. But in reality, the process can be a little more costly than that.
After real estate prices, there are many other financial responsibilities to consider when buying property. Bond registration, mortgage payments, insurance, taxes, and then of course your regular utility, upkeep, and maintenance costs are all important to consider.
Beyond all that, making your home beautiful and functional also forms a big part of what makes a piece of property truly complete.
