Hidden Costs of Homeownership

Podcast Transcription

Hi everyone! Welcome to another episode of PFCU’s Money Talk podcast, I’m your host Maddy. Now that the warmer weather is here, it’s a great time to talk about homeownership. If you’re thinking about buying a house or you’re actively house hunting, you will thank yourself later that you know the hidden costs of owning a home. 

When planning to own a home, many people heavily consider the mortgage payment amount and whether they can afford that payment or not in their decision-making. While this is a primary expense of owning a home, there are additional costs that you should be aware of and consider before finalizing your purchase.

The first one is property taxes. You need to find out what your annual tax payment will be, divide that by 12 and save for that cost monthly. And keep in mind, taxes are just going to go up – you may even get a tax increase in the first year of owning your home, so make sure you have extra room in your budget to plan for that.

Next is homeowners insurance. It costs a lot more to insure a home than it does an apartment. Even if you had renters’ insurance previously, you’re going to have to budget for homeowner’s insurance. Depending on the location of the home, it may be subject to additional required insurances like flood and fire. Be sure to find out what is required for the home you want, get quotes from different insurance companies and be sure to include in your monthly budget.

And next is the lawn. Whether you choose to mow the lawn yourself or hire it to be done, they will both cost you. Upkeeping the landscaping, laying down woodchips or rocks, putting up fencing – it’s all going to add up. And even, you know, even for me, I don't do a whole lot of landscaping. I don't have flowers, we don't do woodchips. So, even if you think, you know, you're not going to be doing a whole lot of landscaping, there's still going to be some things you're going to need. You're still going to have to mow your lawn, shovel snow in the winter. There's going to be some base costs for you either way. So, make sure you’re aware of this when choosing the size of your yard and consider updates or changes. So, for us too, we have a very long driveway. Something you're going to want to consider is how you're going to clear that driveway in the winter when looking at every aspect of a potential home. 

Next is home maintenance. There are a million different unexpected maintenance costs to consider – from appliance repair, roof fixes, a crack fix in the driveway, furnace repair, things come up all the time! It’s important to have room in your monthly budget to save and prepare for these fixes so you're not caught offguard. In our house, sometimes it feels like the fixes and updates never end! And it's not always something huge, it could just be touch-up here or there but things that still require us to buy the supplies. 

These are just a few of the costs you may incur as a homeowner. The National Federation for Credit Union Counseling has a webpage fully dedicated to helping homebuyers so you can check that out. 

Happy house hunting and thanks for listening!