If you’re ready to take the leap from renting to buying, you might have questions about the cost of home ownership: Are there any extra monthly costs of owning a home besides a monthly loan payment? And other than 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 change 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.
You may find it easier to manage your payments if your property taxes are escrowed, which means that you pay a part of your annual property taxes each month to your mortgage lender. This would be in addition to your mortgage payment. Then when your taxes come due each year, 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 the amount, your property tax rate can vary widely by state and county. For example, residents in Forest County, PA, may pay an average of $800 in annual property taxes, while those in Chester County pay an average of over $4,000.
If you currently have renters' insurance, you might assume you’ll pay the same amount for insurance costs after you buy your own home. But, insuring a single-family home with homeowners' insurance typically costs more.
Different types of homes will have varying insurance needs. A condominium may be simpler to insure since you’re only protecting the inside of your unit, while insurance for a single-family home will cover your home and any land you own.
Additionally, if you’re not able to make a 20% down payment, you may be required to pay private mortgage insurance (PMI). This is insurance placed on your mortgage in case you ever default on payments. However, there are some lenders (like PSECU) that offer first-time homebuyer options that don’t require PMI.
Grass doesn’t cut itself. Unless services are covered by a homeowner's association (HOA) fee, once you’re a homeowner, you’ll have to decide what to do about your lawn. You can choose to hire someone to take care of your lawn, or you can do your own landscaping.
You can save money by maintaining your yard yourself, but you’ll need to buy some supplies. Tools like lawnmowers, weed and hedge trimmers, snow blowers or shovels, rakes, gloves, and other accessories will be essential.
Mice, termites, ants, bats – you’ll find plenty of animals that 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 with a much larger (and expensive) problem. Infestations are costly, and many companies offer affordable contracts and will work with you to develop treatment plans to protect your home against different kinds of pests.
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.
Also, 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. Over time, you’ll need to hire a professional for bigger repairs or replacements.
To manage the cost of both routine and emergency maintenance, plan to set aside money each month for a home maintenance fund you can use when needs arise.
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 buy 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 extra home furnishings. It can be a good idea to move into a home as-is before buying furniture or making remodeling decisions. This will allow you to get acclimated to the home and determine what changes you'll need to make (if any!) to best meet your needs.
You may feel like owning your own home is a pipe dream, but don't fret: as long as you prepare in advance, owning your home is entirely feasible. Homeowners made up around 64.6% of all occupied houses in Pennsylvania from 2017 to 2021.
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 at 800.237.7328, extension 3878.