The Real Cost of Home Ownership

Buying a home is one of life's major investments. As with any investment, weighing the pros and cons is crucial. Often times, home buyers only consider things like location, square footage, home style, and the list price. However, the real cost of a home extends beyond its selling price.

Before purchasing that dream home, it's essential to see the whole picture — the real cost of home ownership.

Property Taxes

Based on the value of the home, property taxes vary by state, county, and city. In nearly all cases, the more expensive a home is, the higher the property taxes. Typically, the current homeowner's property tax amount might be found on the homes MLS listing sheet - if it isn't, make sure to ask your real estate agent what the current property tax is for the home. The amount will be annual, so be sure and divide the number by 12 months for a monthly amount.  

Homeowner's Insurance

In most cases, most banks or lending agents may require that you choose and secure homeowner's insurance before issuing any mortgage approval. Insurance on the home will vary depending on the home and the insurance company's rates. However, according to the National Association of Insurance Commissioners, the average annual cost for homeowner's insurance (as of 2013) was $1,096 or approximately $91.33 a month.

HOA Dues

Depending on the home's location, it might be part of a Homeowners Association. Within any Homeowners Association, expect yearly or monthly dues. These dues may include things like common landscape maintenance, snow removal or the dues may cover an amenity center or swimming pool. If considering a home with a HOA, ask your real estate agent for the cost of the annual or monthly dues and what the dues cover.

Energy Bills and Utilities

If you've been living in an apartment or rental home, it's possible that one or more of the utilities may have been included within the monthly rent.

However, as a new homeowner, you will be responsible for all of the property's utilities, usually including the garbage collection service. When considering the price of a home, be sure to factor in these monthly costs. If it's not a new home, your real estate agent can give you an estimate on what the energy and utility costs were for the previous 12 months.

Yard Care and Landscaping

Going from an apartment or condo to a home with a yard usually means lawn care and even landscaping projects. This may add up when determining the real cost of home ownership. Some homeowners may opt to hire a mowing or landscaping service, which will vary in price depending on the size of the yard. Others may choose to invest money in a lawn mower, which means time devoted to cutting the grass. Don't forget the hedge trimmers, garden hose, sprinkler, and gas for the mower.

New construction homes may need complete landscaping - as well as a full lawn (front and back) that can add up to thousands of dollars. Though older homes may already have a lawn and landscaping, they may require updating, from removing old/dead trees to replacing older and over-grown landscaping.

Appliances and Furniture

Not all homes come with all the appliances. You may fall in love with a home and the seller isn't selling the washing and dryer with the property. This is not uncommon. Some sellers may choose to move their refrigerators or stoves as well. This means the buyer of the home must purchase those appliances. Remember that moving from an apartment or a smaller home to a larger home with more square footage often creates a need for additional furniture.

Knowing the hidden costs of home ownership can help a buyer determine how much house can be afforded. With this knowledge, it's easier for buyers to purchase a home that won't break their budget.