MAR 3, 2023
Although buying a home is a great wealth generation strategy that is encouraged for everyone, not a lot of first time homebuyers are aware of the subtle costs of homeownership that only come after, or during, the closing.
Most first time homebuyers are inundated with the cliche advice of saving for their downpayment, ranging anywhere from 3.5% to 25%. However, what a lot of first timers don't realize is that their loan closing costs can amount to anywhere from 2%-5% of the overall loan and include: title search fees, attorney fees, loan origination fees, etc.
Although most buyers know that their property tax payments are typically tied into their monthly mortgage payment, what they may not be aware of is property value reassessments. It's uncommon for a property tax reassessment to be triggered just by the sale of a property, as most reassessments are done at a town level. For example, if your there's a town-wide reassessment that calls for more funding for public schools then all property values will be reassessed to determine your share of the tax bill.
A lot of new homeowners fail to consider that their house isn't just costing them a mortgage payment. The ongoing cost of living should also be accounted for in terms of heating, cooling, gas, and water consumption. These can easily add up to a few hundred dollars a month depending on the size of the home and might even push buyers out of their affordability budget if not properly accounted for.
As a renter, your costs of living are pretty much exclusively covered by the rent (and perhaps utilities). As an owner or landlord, you're responsible for any and all ongoing maintenance of the property. This includes: appliance repairs, roof damages, pest issues, etc. All of these are costs that come with the territory of owning a home and must be maintained to prevent your home from losing its value.
Your home may be located in a HOA community that comes with its own monthly or annual fee that can range from a few hundred dollars to thousands. Although HOAs are required to be paid by the homeowner, they're often not included in the mortgage payment and must be paid separate (even if you own the property outright).
This content is meant for informational purposes only and is not intended to be construed as financial, tax, legal, or insurance advice.
