If you’re ready to take the leap from renting to buying, you might have several questions about the cost of home ownership. Are there any extra monthly costs of home ownership aside from your monthly loan payment? Besides bills, what else will you need to budget for as you prepare to buy a home?
We’ve compiled a checklist of typical home ownership costs. To prepare for the adjustment from rental life to home ownership, check out the list below.
Property taxes throw some first-time homeowners for a loop. Be sure to find out your area’s property taxes in advance and add the cost to your estimated monthly payments.
Some find it easier to manage their payments if their property taxes are escrowed, which means that you pay a portion of your annual property taxes each month to your mortgage lender, in addition to your mortgage payment. Then, each year, when your taxes come due, your lender makes one lump sum payment for you. Some lenders may require this, whereas others may not offer the option. Check with your lender for details about what’s available to you.
As far as amount, your property tax rate varies by state and county. For example, residents in Forest County, PA, pay an average of $860 in annual property taxes while those in Chester County, PA, pay an average of $4,192.
If you currently have renters insurance, you might assume you’ll pay the same amount for insurance costs after you buy your own home. However, insuring a single-family home with homeowners insurance typically costs more.
Different types of homes will have varying insurance needs. A condo may be simpler to insure since you’re only protecting the inside of your unit, while insurance for an entire single-family home will cover your home and any land you own.
Additionally, if you’re not able to make a 20% down payment, depending on the type of loan you have, you may be required to pay private mortgage insurance (PMI). This is insurance placed on your mortgage in case you ever default on payments.
Grass doesn’t cut itself. Unless services are covered by a homeowners association (HOA) fee, once you’re a homeowner, you’ll have to choose whether to hire someone to take care of your lawn or do your own landscaping.
You can save money by maintaining your yard yourself, but you’ll need to buy some supplies, such as a lawnmower, weed and hedge trimmers, snow blower or shovel, rakes, gloves, and other accessories.
Mice, termites, ants, bats – you’ll find plenty of animals who can’t wait to turn your house into their home, too. Opt for routine maintenance to keep your home pest free, or you could find yourself paying more if you end up with a larger problem, such as an infestation. Many companies offer affordable annual contracts and will work with you to develop a treatment plan for your home to protect against the pests most likely to impact it.
Your HVAC system is one of the most intricate and essential features of your home. Once you buy your own home, you’ll be responsible for keeping the system maintained. You might need to hire a professional to make repairs or replace your units over time.
In an apartment, your landlord was always there to take care of any dripping faucets, leaky roofs, or broken siding. Now, those responsibilities fall on your shoulders. You’ll need to take care of plumbing, electrical, roofing, and siding issues on your own or pay a professional to take care of them for you.
To manage the cost of both routine and emergency maintenance, plan to set aside money each month to create a home maintenance fund that can be used when needs arise.
Home Improvement & Furnishings
Unless you build a custom home, it’s likely there are things you’ll want to change or update once you move in. Perhaps it needs a fresh coat of paint or a bathroom remodel. Keep in mind the cost of labor, products, and any required permits to make changes to your home.
If you’re moving from a one-bedroom apartment to a three-bedroom home, you’ll most likely want to purchase more furniture and décor, as well.
The good news is that none of these costs have to be upfront. You can build up savings over time for larger remodeling projects and additional home furnishings. It can be a good idea to move into a home as-is before buying furniture or making remodeling decisions so you can get acclimated to the home and determine what might best meet your needs once you’re more familiar with your new space.
Apply for Your Mortgage
As long as you prepare in advance, owning your own home is entirely feasible — homeowners made up around 63.8% of all occupied houses in Pennsylvania from 2013 to 2017.
Now that you have a better understanding of the costs of home ownership, are you ready to start your journey toward owning your dream home? If so, we’re here to help.
We offer an array of mortgage products to meet your needs, as well as support to answer any questions you might have about your mortgage options. Apply for your mortgage today, or contact us for more information.