For many, buying a home represents a rite of passage in life. Most of us strive for it, and most American households do own their homes. However, today more people are choosing renting over buying, and the home ownership rate in the United States has actually fallen “to the lowest in more than 19 years,” according to Bloomberg.
Owning a home is costlier than you might imagine — one reason many millennials are holding off on the homeowner path. So before you meet with a real estate agent, consider these five costs homeowners pay that renters don’t. They could make you question whether you’re really ready for homeownership.
In 2013, Americans spent an average of $2,132 on property taxes on their homes. You can estimate your property taxes in advance by dividing the amount by 12 and adding it to your estimated monthly payment. You should be able to find this information in your potential home’s MLS information, too.
A mortgage calculator can also help you estimate your property tax costs.
Homeowner’s insurance costs an average of $35 per month for every $100,000 of your home’s value. Or if you intend to purchase a condo, you’ll need a condo insurance policy — separate from traditional homeowner’s insurance — which costs an average of $100 to $400 a year.
The remodeled home of your dreams might pass your home inspection with flying colors, but that doesn’t mean those renovations will last forever. Conventional water heaters last about a decade, with a new one costing you between $500 to $1,500 on average. Air conditioning units don’t typically last much longer than 15 years, and an asphalt shingle roof won’t serve you too well after 20 years.
And don’t forget about those small repairs that you won’t be calling a landlord about anymore. Did your fridge water filter light come on? Notice a tear in your window screen? Can’t get your toilet to stop running? What about those burned out light bulbs in your hallway? You get the idea.
Owning a home means you (should have) planned beyond the down payment — you’ve considered your typical annual maintenance expenses, too. U.S. News & World Report advises planning on spending “between 1 to 4 percent of a home’s value annually on maintenance and repairs.”
Of course, this amount increases as your home ages.
Sure, that monthly mortgage payment seems affordable, but don’t forget to take into account homeowners’ association (HOA) fees. On average, HOA fees cost anywhere from $200 to $400 per month and pay for perks like your fitness center, neighborhood landscaping, community pool, and other common areas. While renters’ garage, gym, and pool access are usually covered in their rent, when you own your home you’re paying for these luxuries beyond your mortgage payment.
When you’re renting, it’s common for your apartment or landlord to cover some costs. When you own your home, you’re in charge of covering it all—water, electric, gas, Internet, and cable.
The cost of your utilities when living in an apartment is quite different than what you’ll pay if you own your home. And while many factors play a role when estimating how much you’ll pay for utilities — like the size of your home and the climate you live in — the most recent Bureau of Labor Statistics’ report on Consumer Expenditures (published April 2015) found that homeowners on average pay $321.75 per month or $3,861 per year for “Utilities, Fuels, and Public Services.”
- Lease Agreements: 5 Things You Didn’t Know You Could Negotiate
- Locking Down Wireless Home Security for Renters
- How to Rent Your Next Home
Powered by WPeMatico