We?re so conditioned to think that buying a home is the American dream. It?s what you should do when you graduate from college and get a respectable job, right?
The thing is, for so many people across the country, owning a home has turned into a nightmare. Between buying houses that they can?t afford and being crushed by maintenance fees, thousands of people have struggled because they don?t understand the hidden costs of owning a home.
So, before you sign on the dotted line, be sure that you have the funds to pay for the hidden costs below.
1. Supplemental Insurance. Depending on where you live, you might have to purchase supplemental insurance like flood insurance that can cost you thousands of dollars per year. It?s important not to ignore these recommendations, and some states might even require them. Many people claim that government agencies like FEMA will step in and help in the event of a severe flood so they don?t have to pay for this type of insurance. However, you can?t rely on that and have to take responsibility for the care of your own home.
Related: 6 Reasons You Shouldn?t Buy a House
2. Closing Costs. While you can sometimes convince sellers to pay closing costs, chances are that you?re going to have to have a few thousand dollars ready to hand over in order to get the keys for your house. Many people are caught off guard with this fee since many TV shows seem to romanticize closing. The truth is, though, that closing is a serious business transaction, and if you don?t have the closing costs ready, you don?t get the house.
3. Home and Pest Inspections. Most people understand that they have to get a home inspection, but it pays to have a pest inspection too since catching termite damage can help you avoid a bad investment. No one wants to hear that their dream home is full of bugs, but it?s completely worth the fee to check so that you aren?t forced to pay thousands of dollars down the line to try to save your house.
4. Legal and Realtor Fees. We know that realtors get a percentage of the sale of the house, but you also have to pay lawyers to review the contracts and make sure everything looks right. This can be a few hundred dollars, and when you are already paying so much for a house and closing costs, it can definitely catch you off guard.
5. Moving Expenses. If you just bought a new house, congrats! Unfortunately, now you have to find a way to move everything you own into the new space. Whether you use moving trucks or ask friends to help you, you?ll probably have to either buy pizza for your helpers or shell out a lot of cash for the movers.
6. New Furniture. When people buy their first homes, they often move into a bigger space, which requires the purchase of new furniture. Sure, you can go to the thrift store and find a $20 sofa, but most homeowners want to fill their new home with new pieces. Try to calculate this into your initial budget, since sectionals for football season can cost a pretty penny!
7. Property Taxes. The thing about property taxes is that they aren?t set in stone. It?s very possible that your taxes could go up even in the first year of home ownership, so it?s important to have an emergency fund on hand just in case you need it.
8. Condo Fees and Fines. If you move into a condo or a planned community, you?re going to have fees that you pay every month for the upkeep of your neighborhood. While you often know about the fees ahead of time, there are also potential fines if you don?t mow your grass or paint your house an unapproved color. Make sure you read the guidelines first so that you don?t have to pay for it later.
9. Utilities. Remember how nice it was to rent and not worry about the water bill? Well, now you are in charge of all the little extra bills that your old landlords took care of. You might even have a few surprises on your property tax bill if your city decides to charge you extra to help pay for streetlights, libraries, and schools.
10. Private Mortgage Insurance. If you don?t have 20% to put down on your first house, you need to get private mortgage insurance. This can definitely be costly, so wise homeowners will make sure that they save enough to buy a house before they move in.
11. Landscaping and Grass Cutting. When you get your new home, you?re going to want it to look as nice as possible. However, you?d be surprised just how much it costs to re-pave the driveway or buy a few new plants. You?re also now in charge of cutting the grass, which could require the purchase of a lawnmower or paying someone to do it for you.
12. Chimney Cleaning. Every homeowner wants a nice, romantic fireplace, but you actually have to do maintenance on the chimney! A chimney sweep once a year should cover it, and it might cost you about $100 each time.
13. General Cleaning. Now that you have a bigger home, you?ll likely need more cleaning supplies, a stronger vacuum, or even hired help to keep you on top of your chores.
14. HVAC Systems. Many people claim that HVAC systems can last for 20 years, but many people replace them every 10 years in favor of more energy efficient equipment. Be sure to thoroughly check the one in your home before you buy to see if you?ll need to replace it soon.
15. Safety Features. Safety is so important, and when you own your own home, you?re going to be even more inclined to protect your assets. Alarm systems, new locks, and other safety features can cost thousands of dollars, but they are worth it for the peace of mind.
Now that you are aware of all the hidden costs of home ownership, you should be well equipped to plan and budget for your home! Good luck with your new place, and remember that it definitely pays to be informed so that you can make the best investment for yourself and your family.