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It’s Not Just About The Mortgage People gearing up to buying a home focus much of their energy into calculating and acquiring the home mortgage. It is easy to forget the other factors that affect the overall cost of owning a home. We’ve broken down these costs to give you a better understanding of what the true cost of owning a home will be. This will help you get the right home for your budget. Let’s start by assuming an individual has a 30 Year Fixed-rate mortgage of $250,000 @ 4.250%. The monthly payment for just the mortgage will cost around $1,230. $14,760 annually. Now lets see how much the additional expenses contribute to the true cost.

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Homeowners Insurance Most lending companies won’t provide you with a home mortgage unless you show them proof of homeowners insurance. Homeowners insurance costs around $800 - $1,700 annually, dependent on the size and age of the home, and the area you live. Ask your insurance agent for a quote to figure in this cost to your overall budget. Let’s say our individual pays $1,200 annually in homeowners insurance.

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Utility Bills This isn’t a surprise to anyone who’s lived on their own. Utilities, such as gas, electric, water and waste removal, have probably been part of your monthly bills while renting. The only difference now is the size of your new home may be bigger than your rented apartment or townhome. This could greatly increase the monthly cost of your utility bill. It’s not uncommon for first-time home buyers to have a utility bill of more than $2,500 during their first year.

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Repair/Maintenance Costs Many homeowners don’t consider these costs when purchasing their new home since it’s typically been fixed up for sale. After a few years though, you may find yourself looking at repairing a roof or replacing an air conditioner. Even minor repairs can add up quick. Consistent maintenance of your home can cost more than $1,500 year, making it one of the most costly aspects of homeownership. Major unexpected repairs like replacing your roof can cost $5,000 or more.

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Homeowners’ Association Fees Depending on where your home is located, you might have a Homeowners’ Association (HOA) to help manage your community’s neighborhood. They are typically in charge of maintaining landscaping, community amenities, security gates, and evaluating the overall look of the homes. Homes within an HOA tend to have additional fees that can cost the homeowner around $200 - $500 per month. This fee is used to help fund the management and maintenance of the neighborhood. Let’s say our owner pays $300 per month in HOA fees.

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Property Taxes As a homeowner, you’re required to pay property taxes on your home. This tax helps pay for public use items; such as parks, schools and road maintenance. The amount you pay in taxes depends on the value of your home and the tax rates where you live. Good rule of thumb is the more expensive your home, the more you’ll pay in taxes. For our example, lets say our individual pays $2,500 a year for property taxes.

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Cost Factors of Owning a Home (Annual Cost)

Mortgage $14,760

Homeowner’s Insurance

$1,200

Utility Bills $2,500

Maintenance Costs

$1,500

Homeowners’ Association Fees

(HOA) $3,600

Property Taxes $2,500

Our owner’s mortgage is $14,760. The total cost of owning and living in their home is actually $26,060 annually. That’s almost 50% of additional costs that many new homeowners don’t think about! When you’re thinking about homeownership, think about all the expenses to make the very best home buying decision.

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True Cost of Homeownership

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