7 surprises of home ownership
"The joys of home ownership."
You'll hear these words dozens of times as you go through the process of buying a home. But that sarcastic turn of phrase won't end when you move into your new house, because the costs in both time and money don't stop at the closing table.
There's maintenance. Americans, for example, spend about 1½ hours a week tending to their lawns and gardens, according to the Bureau of Labor Statistics. The median expenditure for all maintenance is $33 a month, according to the U.S. Census Bureau.
And plumbing fixes: $500 median cost.
And roof replacement: $4,559.
And that bathroom renovation: $3,422.
The list goes on.
Some of these costs — like your utility bill — you can come to anticipate. But there are a lot of unexpected things that come up, too — things you might not have thought of when you were a renter.
Here are seven of the not-so-joyful surprises of owning a home.
If it's leaking, you'll need to get on top of that ASAP. No calling the landlord. You need to fix it now. First, build an emergency fund to pay for these unexpected surprises. Then create a database of people you can call in a pinch — and refine that list if the first guy who your neighbor recommended turns out to be a dud.
You'll need to learn a couple of handyman skills, too. Otherwise, if that second-story bathroom toilet overflows for an hour, you'll end up gutting the bathroom and everything below it. So learning how to shut off the water on every faucet, toilet and appliance is key. You should also learn how to reset circuit breakers, shut off power in an emergency and even how to change a light bulb that's located in a hard-to-reach spot (and buying the ladder so you can do so).
When you buy your home, you'll be full of ideas of what you want to do to turn it into your castle: Expand the living room! Redo the kitchen! Knock out that ugly bathroom and create your own in-home spa! And you may very well do all of those things, but most likely, they won't happen in the first year. Or the second. Or the third.
The reasons are many: You may be house-rich and cash-poor when you move in; you'll spend the renovation money on that emergency fix; living without a kitchen or a bathroom is a pain; that "simple" kitchen renovation costs tens of thousands more than you originally thought; simple inertia.
Don't beat yourself up over it. It's not like someone from HGTV is going to swoop in and do it all for you in one shot. It's normal to take some time making everything just so (even if you don't get to it until you're ready to sell the place).
Not only can an insurance company drop you at any time, it can force you to make an immediate repair and threaten to drop your coverage if you don't.
Yes, home insurance inspections are rare, but your insurer can order one. In addition to required repairs, you could pay higher premiums as a result of the inspection.
Another instance in which you'll face higher premiums: If you ever file a claim, no matter the reason. An InsuranceQuotes.com study found annual premiums increased an average of 9%, or about $150, following a claim. Some states fared much worse than others, according to the study. In Connecticut and Minnesota, for example, the average premium increased a whopping 21% following a single claim.
You can't get around having insurance unless you own the house outright. And it isn't cheap.
The average annual homeowners insurance premium cost $909 in 2010, according to the most recent data from the National Association of Insurance Commissioners.
And it's far more expensive if you need supplemental flood or earthquake insurance.
Unless you live in a condo, you'll be doing a lot of maintenance on the house or paying someone else to do it. Things like mowing the lawn, weeding the garden, replacing cracked lighting fixtures and cleaning are all now up to you.
Of course, you can hire some of these things out. But if you do that for every single thing, the costs add up. It's boring, tedious work, even if, inevitably, someone will tell you that's just part of "the joys of home ownership."
And even if you do it all yourself, the costs add up. The U.S. Census Bureau says the median cost for maintenance is about $400 a year.
That might not be enough.
One rule of thumb suggests you should budget 1% of your home's purchase price each year for maintenance, including repairs, both planned and unplanned. Because you never know when the hot water heater won't heat anymore or the dryer won't dry.
If you're moving from an apartment to a stand-alone home, be prepared for utilities sticker shock. It'll cost a lot more to heat and cool when you've got four walls and a roof exposed to the elements than if you were living in a box. You can add or upgrade insulation to keep those costs downs, but that process will cost you, too.
The median monthly cost for electricity is $121 for homeowners and $90 for renters, according to the U.S. Census Bureau. Natural gas is more expensive, too. Homeowners pay a median monthly cost of $75, while renters pay $54.
Plus, you may be responsible for more utilities than when you rented.
If water was included in the rent, get used to picking up that tab ($42 a month). You may also pay a separate sewer bill, unless you're part of a homeowner or condo association. Even then, you could get additional bills for renovations like painting and roofing, even if you personally think the paint and roofs are fine.
Sure, it's easy to factor in the cost of the first year's property taxes into your budget (and if you're still in hunt mode, Zillow.com lists a home's property taxes for the last four years as part of its listings).
But that's the first year you'll own the home only. Property taxes rarely go down, but you can expect them to increase.
The U.S. Census Bureau says the median cost of real estate taxes is $2,075. But property taxes are different for every community. The Tax Foundation has a nifty tool that shows median property taxes for your county. Zillow also lists the tax on individual properties and the percentage change from year to year, too.
Down the line, if you make major improvements to your house, expect to see your tax bill increase as the assessed value of your home increases.
There will always — always — be something to do. And that's beyond your basic dream list of renovations.
Because something will always break when you least expect it, maintenance needs to be done on a regular basis. The lawn will always need to be cut when spring comes around again. And if you're in the home long enough, the colors you painted the rooms when you first moved in will become dated and need to be redone, or that brand-new washer/dryer will stop acting so brand new.
But that's the price we pay for owning a home. If you get fed up, remind yourself of your mortgage interest tax deduction and that owning a home is a long-term way to build up equity instead of throwing money away on rent.
And that you can paint the walls any color you want.