Becoming a homeowner is a big step for people who have been renting for years or even decades. Not only is there prestige associated with being a homeowner, owning a home can also be a great investment.
Before you buy your first home, make sure that you understand all of the expenses associated with home ownership that can extend farther than your mortgage payment. In other words, don’t get caught in over your head in terms of the financial commitment connected to owning a home.
A monthly home mortgage payment usually includes the principal amount due on your loan, interest on the loan, property taxes, and homeowner’s insurance premiums. The mortgage payment you make each month should remain consistent and not fluctuate from month to month. But besides your monthly mortgage payment, you will likely be responsible for additional home-related expenses throughout the year.
Following are some examples of other fees, dues and payments that most homeowners must include in their budget:
Homeowner’s Association Dues: Not all neighborhoods have homeowners associations. If yours does, you will have to pay dues on a monthly, quarterly or yearly basis. The amount due varies from one association to another, and pays for different amenities. Trash pick-up is sometimes included in HOA dues.
Trash Pick-Up: If you do not live in a community with a homeowner’s association that collects dues for trash pick-up, you will have to pay this expense independently.
Lawn Care: If the home you purchase has a lawn or a garden, you will either have to take care of the lawn yourself (including mowing, fertilizing, etc…), or hire a service to take care of this for you.
Maintenance and Repairs: All homes – no matter how new, nice or beautiful – experience periodic maintenance issues. You may have a leaky toilet, a broken mailbox, or a rusted gutter. No matter what the problem, it will be your responsibility to pay for the repairs.
Air Conditioning and Furnace Units: A home’s HVAC system should be serviced each year. But even with regular maintenance, a home’s heating and cooling system might need repair work.
Refrigerators, Washers, Dryers, and Other Appliances: No matter how well appliances are maintained, they don’t last forever. Plan for the need to replace at least one major appliance every so often.
Don’t get overwhelmed by the potential expenses related to homeownership. Instead, go into your homeownership experience educated and prepared by adding these expenses to your budget. If you plan ahead, your homeownership experience should be nothing but successful.