It’s no surprise that buying and owning a home comes at a significant cost. It’s likely one of the biggest financial investments you’ll make. There are expenses associated with homeownership that you’re likely aware of and have already budgeted for, like mortgage payments and insurance. However, there are some costs of owning a home you might not have considered. While budgeting for common expenses is key, learning about and preparing for the lesser-known costs may help save you some stress as you take on this new financial journey.
List of bills to pay as a homeowner
When you become a homeowner, certain bills become a part of your known financial responsibilities. These expenses are consistent with most households and typically require careful consideration when calculating your monthly expenses. To help prepare, here’s a list of bills to pay when owning a house:
- Mortgage payments: After closing on your home, your monthly mortgage payments go toward paying off your loan and building equity. Mortgage payments are broken down in two parts. A part of the payment will go toward the principal you borrowed, which helps build equity, and the other portion of your payment will go toward interest, the fee your lender charges for borrowing money.
- Insurance premiums: Every lender will require their borrower to take out a homeowners insurance policy. Homeowners insurance is meant to help protect your home and personal belongings, although coverage will vary depending on your policy. Depending on your down payment and other coverage you might need, you could be paying other premiums as well.
- Property taxes: Like every homeowner, you’ll be responsible for paying property taxes. Property taxes are determined by your local government, and the funds are used toward public services like schools, infrastructure and emergency services.
- Utilities: Your utilities involve systems that help maintain your home’s functionality, like gas, water and electricity. The cost of your utilities will depend on the size of your home, where you live and how much you use them.
- Heating, ventilation and cooling (HVAC) system: Your HVAC system handles stabilizing your home’s temperature and making it comfortable throughout each season. Heating and cooling systems are typically powered by gas and electricity. Like utilities, your consumption habits affect how much you pay for them and are often reflected in your utility bills. It’s worth noting that if your HVAC breaks or needs repairs, this can be a costly expense worth considering as well.
Do note that while the above list is meant to help you budget, there are many other expenses that come along with homeownership. The above examples are typically universal no matter what home you buy. The next section will cover examples of common expenses that may be more dependent on your lifestyle or where your home is located.
Common expenses of owning a home
In today’s complex and technologically savvy society, there are other common expenses of owning a home. While your personal cost of living may not include some of the following expenses, they are frequently encountered:
- Moving costs: Some people get so wrapped up in making their home purchase that they forget about the moving in part! While there are many great moving services available today, moving costs can rack up a pretty hefty bill. Whether you’re moving into a home near or far, budgeting in your moving costs may be a helpful way to prepare.
- Internet: As mentioned, in today’s society the internet has become an essential way for people to stay connected. Whether you’re working, communicating, using it for entertainment or education (like reading this article), internet service is an additional expense to consider. The cost will likely vary depending on your provider, package and desired services.
- HOA fees: If you live in a community governed by a homeowners association (HOA) you’ll likely have HOA fees to pay. These fees cover maintenance, management, renovations and services within the community. Your HOA fees will likely vary based on your community. and services within the community.
- Cable or streaming subscription services: Similar to the internet, you may be considering cable television or streaming subscription services. Depending on which package you purchase and which streaming service you subscribe to (if any), your monthly costs will vary.
- Landscaping: Whether you’ve got a green thumb or hiring someone who has one, landscaping is another common expense of owning a home. Depending on where you live, your property may require less upkeep or it may be included in community fees. Either way, it can be helpful to consider your landscaping needs and budget accordingly.
- Upgrades and renovations: As you and your home grow old together, you both may require some extra TLC. Whether you’re replacing outdated appliances or making major renovations, you may want to keep this in mind as you project your yearly and monthly budgets. Appliances can break and major renovations may pop up despite your best-laid plans.
What are the additional costs of owning a home?
Beyond your typical household bills and other common expenses lie the hidden costs of homeownership. Do note that the items in the following list aren’t guaranteed hidden costs, but some of the ones that might be worth considering:
- Pest control: While you likely didn’t invite those ants or mice inside, they may have joined the party anyway. If you’re experiencing a pest problem, it will require some form of pest control. Hiring exterminators or paying for the tools you need to get rid of pests could become costly.
- Snow removal: If you live somewhere with snowy winters, you may want to consider investing in snow removal. Whether you’re getting your own equipment, hiring a professional or recruiting the kid next door, understanding your snow removal needs and how much it might cost you may help inform your budget.
- Home security: You may consider investing in a home security system to help protect your property and peace of mind. Home security systems typically come with an installation fee and often incur monthly expenses thereafter. The cost will depend on the level of protection and service you purchase to help you feel safer at home.
- Mold control: Mold control is yet another potential hidden cost of homeownership. Moisture and inadequate ventilation can lead to mold growth, which may be a threat to both your health and your home’s structure. Mold control may require professional intervention and renovations on your HVAC system which can be costly.
- Unexpected repairs: Unexpected repairs may just be the most frustrating kind of hidden cost. No matter how well-maintained a home is, sometimes things just ... happen. Leaks and floods and breakdowns — oh my! Expecting the unexpected comes with the territory as a homeowner, and budgeting for emergencies is best practice.
- Flood, fire and disaster damage: While you can’t always predict these events and hope they never arise, adequate insurance coverage may be the best way to help protect yourself against costly disaster damages for peace of mind.
An adventure is defined as “an unusual, exciting and sometimes unknown activity,” which certainly holds true to homeownership. Just like preparing for any adventure, there are things you know you should take with you and some things you learn along the way. Hopefully, the lists above helped give you some idea of the hidden costs of homeownership, so that you’re better prepared to budget accordingly on your adventure.