Are you thinking of buying a home? There are several hidden expenses that could seriously drive up the cost of owning. These hidden costs need to be fully factored into your budget before making your final decision. Several of the most common and costly to be considered are:
Property Taxes
Most likely during your closing process, if not sooner, you'll gain a clear understanding of your property tax liability for each year. Most borrowers are given the opportunity to pay a portion of their annual taxes with their mortgage each month. The mortgage provider places these dollars in an escrow account. When the tax bill comes due, the mortgage provider will make the tax payment. The obvious advantage to paying the bank 1/12 of the amount due each month is not having large payments come due at tax time.
As taxes are determined by local or county governments, often times there are additional fees/taxes imposed by local governments. They may include fees for local parks, schools and project funds.
Homeowner's Insurance
Although not typically required by law, homeowner's insurance is almost always required by lenders if you still owe on a mortgage. Once you own the home free and clear, home insurance becomes optional to you although highly recommended.
Carefully review your policy options with your insurance agent. In areas of the country with earthquakes or hurricanes happen, these may not be covered without having an additional policy. Key factors to consider include the amount for your deductible, coverage amounts, liability and "umbrella" coverage.
There are Hidden Costs to Keeping Up Your Home Value
There are also definite costs associated with your efforts to maintain and enhance your home value. These costs may include maintaining the state of your roof, your HVAC system, landscaping, period painting and general wear and tear due to sun, heat, and cold weather.
Are You Up to the Challenge?
Living the rental life saves the aforementioned costs. It also saves time and headache as other than changing a light bulb at your rental, most all costs are shouldered by the owner and not you the renter. Most all upkeep and repairs are shouldered by the owner, and not you the renter.
Owning a home comes with significant responsibility and added cost. But, it also comes with significant satisfaction and financial reward.
