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Sneaky Expenses of Home Ownership

Sneaky Expenses of Home Ownership

We all know that buying a home is an expensive investment. If you’re a first-time homeowner, here are a few expenses that might catch you off guard.

Private Mortgage Insurance (PMI): Typical first-time homebuyers put a down payment of less than 8% versus the 20% that is considered standard. Most lenders will require you to pay PMI until you’ve paid off 20% of your home’s value. For example: For someone putting down 7.6% on a $220,000 starter home, a 1% PMI could amount to as much as an extra $2,000 per year until you would reach 20% equity.

Utility bills: According to a 2018 Zillow analysis on hidden home costs, utility bills average $3,000 per year. Ask to see recent utility bills so you are prepared for future bills. Eventually, you may be able to make home improvements to cut your electric costs in the future.

Maintenance costs: As a new homeowner, it’s important to maintain your home. Expect to spend anywhere from 1% to 4% of your home’s value on annual maintenance. This includes expenses like HVAC repairs and maintenance, cleaning gutters, lawn care and snow removal. It is suggested to budget in routine maintenance and emergency repairs so you’re not caught off guard when a problem arises.

Property taxes: The dollar amount can vary significantly depending on where you buy a home, but it is something to factor into your budget. To find an exact figure, reach out to your local tax office. 

Insurance cost: On average, a homeowner will pay $100/month on insurance against property loss or damage. However, if you buy in an area that has higher chance of natural disasters, your rate could be much higher.

The thought of becoming a homeowner is both overwhelming and exciting. While there is a lot to think about, we are here to help you every step of the way. If you are looking to purchase a home, we’d be happy to discuss our flexible financing options and would love to get you into your dream home.