Unexpected and Hidden Homeowner Expenses
Point of Interest
Homeownership is an exciting step for you and your family. While many financial benefits come with owning vs. renting, there are also additional costs you will be responsible for. By taking the time to learn about the true cost of owning a home, you will better prepare yourself to enjoy a positive ownership experience.
When calculating the costs of owning a home, most people know to factor in expenses like mortgage payments, homeowner’s insurance and property taxes. If this is your first time owning a home, however, you may be surprised to find out that there are a lot of expenses that come with a home that you’re unaware of. These ‘hidden” costs tend to sneak up on first-time buyers who are ill-prepared, so it’s best to make sure you educate yourself before signing on the dotted line. That way you can budget and be aware of what you’re getting into — well before you’re in the thick of it.
The hidden costs of owning a home
1. Lawn care
Most renters either have no yard because they’re in an apartment or they get to enjoy the spoils of a lawn care service team paid for by the homeowner. When you’re the homeowner, though, the onus of responsibility falls on you. You’ll either need to pay a professional to manage your lawn or start budgeting time to take care of it yourself. This includes cutting the grass, landscaping, tree trimming, fertilizing and any pest removal or control.
For many, the move to a new home means an increase in the size of their living space. While this is great for comfort, it does mean your utility costs will likely be increasing. This is especially true if you’re moving into an older home that might not be as well-sealed as a newer apartment. An issue like this can dramatically increase the cost of heating and cooling.
If your living space is increasing in size, the areas you’ll need to keep clean will also increase. What this means is more wear and tear on your cleaning tools like vacuums, as well as a higher cost for cleaning supplies. It may not seem like a major expense, but over a year, it can add up and become significant.
4. Maintaining to comply with HOA standards or correcting HOA violations
“Most buyers are aware of any monthly HOA fees, but they sometimes forget the cost of complying with those regulations. If your neighborhood requires aggressive yard maintenance or regular repainting, those costs won’t be included in your monthly bill,” said Shawn Saunders, Austin, Texas market manager for Rex Homes.
Take some time to analyze what you’re required to do to stay compliant with the rules of your homeowner’s association. Your HOA will provide the documentation you can use to get quotes or other necessary information and begin assessing potential costs for repairs or upgrades.
Unless you’re willing to pay professionals to handle many of the unexpected costs on this list, you’ll be taking care of them yourself. Yes, this may save you some money, but it’s going to eat into your free time. Be aware that owning a home is much more than just a financial commitment.
6. Pest control
When you have a bug problem in a rental property, it’s taken care of by the homeowner or landlord. When you own a home, though? Surprise! You are the homeowner now — there’s no one else to call. To deal with bugs and other pests, you’ll need to invest in home pest care products or the services of a professional pest control expert, and it will be at your expense.
7. The roof
One of the biggest surprise expenses that can hit a new homeowner is the roof. It’s easy to forget that the technology that keeps you dry during storms does not operate at 100% forever. At times, you will need to repair parts of the roof or even replace the entire roof if the damage and wear and tear get to be too much. This can be a costly venture — low end roof replacement costs range between $6,000 and $9,000 for a simple 17 square asphalt and shingle roof, and between $10,500 and $16,500 for a larger 30 square basic 30-year architectural asphalt shingle roof.
8. Appliance maintenance
Things like refrigerators, washing machines and dishwashers can cost thousands of dollars to replace. You may not be able to predict when these machines decide to go, but you will be responsible for paying for the repairs or replacements when it happens. Home warranty plans can help with the costs, but those warranties are also an additional cost and might not cover certain things or be a great fit for all situations.
9. Furniture and decorating
If your home’s living space increases in size, you’ll need to have furniture and decorations to fill that additional space. Unless you’re moving from an equally sized rental, you will probably need to buy at least some new furniture for your new home. You won’t have to do this right away if you can deal with some empty space, but you won’t be taking full advantage of the extra space until you do.
10. Plumbing problems
Toilet clogged? Won’t flush? Sink backed up? Is a pipe leaking? Unfortunately, you can’t just call maintenance at the apartment complex or your landlord to clear up the problem. It’s up to you to pay for fixes and repairs, including things like septic tank issues, pipe repairs, pump fixes, snaking and other more involved problems that regularly occur in a home. The average cost of a plumber visit is several hundred dollars, and depending on the issue can be much more expensive from there.
11. Pool care
For those homeowners that purchase a home with a pool, the upkeep can be costly — a monthly pool cleaning alone will run you, on average, a couple hundred dollars. You’ll need to handle cleaning, chemicals, pump and heater maintenance, leaks and leak detection. Unfortunately, if you want to protect the value of this asset, you won’t be able to neglect these expenses or you could end up with a pool that won’t work or needs expensive repairs.
12. CDD fees
Some neighborhoods have what are called community development district (CDD) fees. In a nutshell, the neighborhood upgrades were paid for in the area before you moved in, including things like roads, parks and schools. The costs of paying back the loan on these improvements are passed onto homeowners in the area in the form of CDD fees, which range on average from $1,000 to $3,000 and are usually tacked on to your tax bill at the end of the year. These fees can occur for as long as 30 years, so it is important to know whether you’re buying in an area that requires you to pay them before closing.
If you’re not putting down at least 20% on a down payment, you will owe private mortgage insurance (PMI) on top of your mortgage and insurance payments. You’ll pay this premium on top of your mortgage payment every month until the equity in your home increases to 22%. You may be able to request PMI removal at 20%, but it’s not guaranteed. Lenders must remove it at 22%, though.
14. Exterior maintenance
The outside of your home is now your responsibility to keep clean, working properly and up to HOA requirements. To do this, it’s going to involve things like pressure washing, gutter cleaning, lawn care and trash removal. You’ll either be investing your time to cover these issues or paying a professional to do it for you. Either way, there is a cost.
15. HVAC maintenance
A new air conditioning or heating unit can be expensive. When you lived in a rental property or apartment, this wasn’t your responsibility to pay for. However, now that you’re the homeowner, you are required to cover the costs of any repairs or replacements. Again, you won’t be able to predict if and when your HVAC system goes, but when it does, you’re on the hook for the costs.
How to prepare for the hidden or unexpected costs of owning a home
You’ll never be able to prepare for unexpected costs as they are by nature, unexpected. However, what you can do is move many costs from the unexpected category into the expected. By educating yourself on the costs and expenses associated with owning a home, you’ll be better prepared to budget properly. That being said, it is up to you to apply them to your budget, or the information does you no good.