The Hidden Costs In Owning Your Own Home

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Own A Home Now With Down Payment Assistance


"Save money for your mortgage down payment by reading our money saving tips and articles."

The Costs of Owning A Home
© – Krakozawr

As you're beginning the process of saving for your new home down payment, you should investigate all of the potential expenses you're about to take on. While we're all aware that we must pay a property tax bill, a property insurance bill and our mortgages, there are hundreds of little expenses that can add up as you begin your path to home ownership that you may not even be aware of. Continuing our series "Owning Versus Renting" this installment will discuss some of the hidden costs of home ownership that you need to be aware of and how to plan for them. (If you are just starting this series now, we recommend first starting out with the benefits of renting versus buying and the advantages of buying versus renting.)

Insurance Can Cost Home Owners

Insurance is not just about protecting your property! In addition to your homeowner's policy which will protect you in the event of a flood, fire and other catastrophic events, there are other insurance considerations that you should budget for such as:

  • Liability Insurance - Check your homeowner's policy carefully when you are applying for it. There are certain liabilities that you should be covered for such as slip and fall accidents, damage to your property by vandals, damage to your property by tenants (if you choose to use the property as an investment property) and contents insurance which is separate from the typical policy that most homeowners purchase.
  • Disability Coverage - Have you considered what is going to happen to your monthly mortgage payments if you (or your spouse) are injured and unable to work? Check with your employer about your short and long term disability coverage to ensure that your mortgage payments can be made even if you're injured and unable to work.
  • Life Insurance - Check and see what the rules are with your mortgage company. Many mortgage contracts offer mortgage insurance coverage which in effect states that your mortgage will be paid in full if either you or your spouse dies while you are still financially responsible for a mortgage. This does add some cost onto your monthly payments but this may be an investment worth having. If your mortgage does not have this clause in it you will want to purchase a life insurance policy that will help cover the full amount of your mortgage in this unfortunate event.

Town Expenses

Do you know the expenses of living in the town you've selected to buy your new home? There are a number of considerations besides property tax rates that you must be aware of:

  • Water Rates - Take a trip to the town hall where you are considering purchasing a home and find out what the current water rates are, when the last increase was and how often the rates have increased. While this is certainly a foreseeable expense, it is better to have an idea of the historic increases which can greatly impact your budgeting (this goes for renting also and can make an impact in your down payment savings plan).
  • Trash Expenses - Does the town or city where you are considering moving include your trash expenses as part of your taxes or are they a separate expense? Many towns have limitations on how much trash you can put out during a cycle with charges for additional bags or items. You know how much trash your household generates and knowing how this will impact your monthly expenses will help you prepare your budget as you plan for the exciting prospect of owning your own home.

Maintenance Expenses Can Really Add Up For Home Owners

We all understand that properties require maintenance but most of us are not really aware of all of the little things that can add up that will need to be maintained when we are purchasing our first home. Some things to consider are:

  • Electrical Wiring - Evaluate how old the wiring in your dream home is before you make your down payment. Electrical repair expenses can mount up very quickly before you even realize they're happening. Check for modernized systems such as breaker boxes (versus fuse boxes).
  • Smoke, Fire, & Other Systems - If the home you're considering making a down payment on has modern detectors for smoke, fire and other systems that may be required by your municipality you should be in good shape. However, these systems will require minimally annual maintenance by qualified technicians and should be prepared for in your budget.
  • Plumbing Systems - Many homes today have their original plumbing in them. If you are saving for a down payment on a brand new home this is typically not an immediate consideration, however for those who are saving towards an existing home, you will want to have your plumbing systems checked out thoroughly and ensure they are up to code. Make sure they are well maintained and have no current issues. A good plumbing system is necessary not only for personal hygiene but also to keep our heating systems running.
  • Heating Systems & Hot Water Heaters - Regardless of how new the home is that you're saving for, heating systems and hot water heaters do not last forever. Annual inspections of your heating system are a must to ensure that they remain in good working order. Most hot water heaters will last approximately ten years but should be included in your savings plan as they will eventually need replacement.
  • Insulation - The insulation in your home is going to impact a number of things in your budget including your heating bill, your cooling bill and it's also going to make an impact on your comfort. Familiarize yourself with the insulation in the home you're saving for and ensure that it is adequate for your needs. Consider upgrading (budget for this) if it needs it.

There are many considerations to be aware of as you're saving to buy a home. These are only a few of the hidden expenses of home ownership that you should be aware of as you begin your savings plan. Educate yourself - an educated buyer is a seller's best friend. Next in our series of renting versus owning, we will take a look at the hidden costs of renting a home.

This article is written by guest author Doreen Martel exclusively for Save For House.

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