Understanding the Real Costs of Owning a Home with this List of Homeownership Costs
Don't buy a home without first understanding the real costs of homeownership as explained in this home buying article.
Do you understand the real costs of owning a home? Buying a home can be more expensive than you think, and the true costs of homeownership can be quite a surprise to first-time homeowners. Remember, the actual selling price of the North Carolina home you are buying is only a part of the overall cost of buying and owning a home.
Taking the time to understand the real costs of owning a home before buying is the best way to determine exactly how much house you can afford to buy while also avoiding the financial stress of not having enough money to pay your bills once you become a homeowner. Let’s take a look at some of the costs home buyers should make sure they can afford before buying a new home in Raleigh, Durham, and Chapel Hill.
Home Inspection and Appraisal
Before you close on your new home, home buyers will need to pay for a home inspection and appraisal. Most likely, the home inspection will also reveal further homeownership costs by pointing out needed property repairs (e.g., electrical problems) and issues that may need maintenance in the near future (e.g. replacing an older hot water heater). Along with the home appraisal and inspection, buyers should also consider having a pest/termite inspection prior to buying the home.
Closing Costs for Your Home Purchase
Another additional cost of buying a home comes in the form of closing costs when home buyers come to the closing table. Buyer’s closing costs (e.g., processing fees, underwriting fees, recording fees, survey fees, title insurance costs, etc.) often range between 2 to 4 percent of the mortgage loan amount. Buyers can negotiate with the seller to get them to cover some of these closing costs.
Moving Expenses for Home Buyers
Now that you’ve closed on your home and have the keys in hand, it’s time to move into your newly purchased home. Most homeowners hire a professional moving company to move their belongings into their new home. Even if you are just moving from one side of the city to the other and not across the country, this move could cost thousands of dollars in moving expenses.
Property Taxes and Homeowners Insurance
Understanding the real costs of owning a home includes understanding the actual amount of your monthly mortgage payment. Some first-time homeowners make the mistake of budgeting for the principal and interest portion of their monthly mortgage payment while forgetting about the additional property tax and homeowners insurance amounts which get tacked on to that payment. Even if your mortgage is fixed, these escrow costs are not fixed as both property taxes and insurance premiums are likely to rise as the years go by.
HOA Fees for Homes with Homeowners Associations
Obviously, HOA dues will not apply to all individuals who buy a new home in North Carolina. If you do plan to buy a home in a community with a homeowners association, make sure the amount you will pay for HOA fees fits your budget. Keep in mind, some of the costs will be offset as your homeowners association dues usually pay insurance costs (exterior of property but not interior and contents) and may include landscaping maintenance as well.
Property Repairs and Ongoing Property Maintenance
Repairs to your home, unlike regular maintenance tasks (changing air filters, seasonal HVAC checks, etc.), are unpredictable and sometimes very costly. Buyers who purchase new construction can avoid some of the costly repair expenses with builder warranties. Either way, budgeting an amount each year for these two costs of homeownership (repairs and ongoing maintenance) is a smart move for homeowners. Keeping your home in top shape is the best way to protect your investment.
Landscaping and Yard Maintenance Costs
If you are a first-time home buyer in North Carolina who has always lived in apartment buildings, then you may forget about adding landscape maintenance to the real costs of owning a home. It is not necessary to hire and pay someone to take care of your yard maintenance. However, even if you plan to cut your grass, trim your shrubs and do plantings yourself, there is the additional cost for equipment and supplies.
Utilities, Cleaning, Furniture: Additional Costs of Homeownership
Additional costs of homeownership include a wide-range of tasks and items buyers may or may not have considered when determining a housing budget. You will need to pay for utilities (power, water, gas, etc.) and items like cable tv and internet services. There is also the cost of keeping your home clean, either with a cleaning service or by purchasing supplies and doing it yourself. Then, of course, you need something to sit on when you are tired of cleaning. So, you’ll also have to purchase furniture.
As you can see from the items above, buying a home and owning a home is often more costly than homeowners may first expect. Understanding the real costs of owning a home before you buy will improve the homeownership experience.
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