In Addition to a Mortgage, What Costs Should Be Factored Into Owning a Home?

For some home buyers, the extra costs of owning a home can be a surprise. When calculating how much home they can afford, they focus wholly on the mortgage payment (including taxes and PMI), which is, of course, a large chunk of their monthly expenses, but there are some other expenses they may or may not be aware of. We don’t want anyone to be house poor, so here is a list of expenses that home buyers face before and after signing the closing paperwork.

  1. Closing Costs (between 2% and 5% of purchase price). They may include a credit report fee, loan origination fee, appraisal fee, survey fee, attorney fees, title insurance fees, escrow deposit, inspection fees, etc.
  2. Home Insurance. Home buyers are required to purchase basic coverage and additional policies (wind and hail, flood, etc.) prior to finalizing funding.
  3. Homeowners Association Fees. Coverage for HOA fees can be for anything from common area maintenance to amenities, like a swimming pool and club house.
  4. Condo/Townhome Association Fees. Similar to HOA fees, COAs can also include the master insurance for the entire building.
  5. Home Warranty. Warranty companies often offer a renewal for pre-existing warranties.
  6. Termite Bond (a contract for treatment with a pest company). Typically termite bonds last ten years from the first treatment and include annual inspections and treatment when needed.
  7. Utilities. While electricity and water may be a given, home buyers need to consider that there may be an increase in costs from what they’re used to paying, because every home is different in terms of square-footage, insulation, windows, orientation, etc.
  8. Appliance and System Maintenance. Every home has different features that may need yearly or monthly maintenance, including: new filters, water softener salt, machine tune-ups, etc.
  9. Upgrades/Replacements. Older homes eventually need to have features replaced, renewed, or upgraded, including the roof (15-25 years, depending on the life of the shingles), windows or panes, pressure washing, exterior painting or staining, etc.

Now, keep in mind that these don’t apply to everyone. What a buyer pays depends on their financing, where they purchase, and the age and condition of the home. Realtors and lenders can give a good idea of what extra expenses may be needed when purchasing a specific property. However, you just never know what might come up. So, make sure you keep an emergency fund set aside to pay for unexpected service calls. Having a home warranty can also help. Ask your Realtor how to get one.

If you have any questions about buying a home in the Wilmington area, give us a call or send us a message through our Contact page.

About the Author
Meghan Henderson
Meghan is the Marketing Specialist for The Cameron Team and a published author of two young adult books. She also creates digital and printable planners and trackers, as well as coloring pages for Larkspur & Tea.