The Hidden Cost of Homeownership

Buying a home is a big decision that will impact your life for years to come. Choosing the right house in the right location and the right price point can help you live your best life. But how do you know how much you can afford? There are many hidden costs involved in homeownership that must be taken into account to ensure you’re not overextending your budget.

Insurance
Until you pay off your mortgage, the bank owns part of your home and will require you keep it insured. Even after it’s paid off, insurance is an essential part of protecting your investment. In addition to homeowner’s insurance, you may also need mortgage insurance. This fee is attached to mortgages when less than 20% is put down on the home. Mortgage insurance usually runs around 1% of the value of your loan.


Property Taxes
Property taxes cover expenses for things like public works, schools, police, and fire departments. A lot of mortgages will wrap the cost of your property taxes and insurance into the monthly payment, but this expense won’t usually be included in your initial loan quote. The national property tax average is $6,000 a year, but the exact amount you pay will vary based on location and property.


Maintenance
When you rent your home, all you have to do is reach out to your landlord if something breaks down. When you own your home, you’re responsible for any broken refrigerators, clogged pipes, and anything else that needs upkeep. Even expenses covered by your insurance company will typically involve a deductible. Budget for at least $3,000 a year for maintenance and upkeep on your home.

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