What are hidden costs of home ownership? You’ve bought your first home and that’s awesome. But have you considered some of the hidden costs that home will incur? It’s a lot more than your mortgage payment.

One of the largest expenditures you’ll incur will be for maintenance and repairs. In order to keep your home in good shape, you’ll need to maintain it and make repairs. You know from my previous posts that I had to reroof my home last summer, and it still need plumbing work. And, as I’ve also discussed, I wasn’t planning on a roof replacement this year. I thought I had another 10 years before the roof would be put on my radar. So how do you plan for these types of issues? I recommend putting aside 1% to 3% of the home’s value every year in anticipation of work on the home. This is NOT a percentage of what you paid, it’s a percentage of the current value of the home. And remember, if you let repairs go, they can turn into more costly repairs later on.

If you have a mortgage, your lender will probably collect extra money for property taxes and insurance and put them into what’s called an escrow account. When those payments are due, the bank will pay them out of the stored funds. However, those costs, especially homeowners’ insurance, are going up constantly. These costs will raise you monthly payment, and it could be significant. Shop for homeowners annually.

The larger the home, the more it will cost to heat and cool. The more people living in the home, the more water and electricity you will use. You also need to consider HOA fees (if you have to pay them), trash, sewer, landscaping including lawn care, etc. You also have to furnish the home, put up window coverings, and any renovations you might consider down the road. In my case, when I renovated my kitchen and main bath, it became apparent that the renovations were necessary, not just cosmetic.

Moral of the story:

Remember to consider all the hidden costs with home ownership. And, if you know what these costs are ahead of time, you can plan for them and put them into your budget. Happy home ownership!