Thinking about buying a home? Whether you’ve been a short-term or long-term renter, you might get the itch to find a permanent home and start building equity. In addition to paying for a monthly loan, there are other fees and expenses that come with being a homeowner. Check out this list of ongoing homeownership expenses.
Mortgage payments – Each month, you’ll have a mortgage payment due to your lender. Your mortgage covers the principal and interest. The principal is the amount originally borrowed, and the interest is the extra cost of borrowing money. Fixed-rate mortgages are very common. By getting a fixed-rate mortgage with Alltru, your interest rate will remain the same during the life of your loan. If you buy a home with less than 20% down, you will have PMI, or Private Mortgage Insurance, added to your mortgage payment. This protects the lender in case you stop making your payment (which you shouldn’t do).
Property taxes – Property taxes must be paid to your state every year for simply owning property. These taxes can be paid when at the end of the year every year or they can escrowed into your mortgage payment. Paying for your property tax all at once can take a small chunk out of your savings. By escrowing your payment into your mortgage payments, it’s easier to manage and more easily fits into your budget.
Insurance – Before you close on buying a house, you must have homeowners’ insurance arranged. There are different types of homeowners insurance for different types of homes, such as condos, single family homes, and manufactured homes. There are other types of insurance that you can add, such as liability insurance, which covers costs if someone is injured on your property or if you damage someone else’s property. If you live near a body of water, your lender might require you to purchase extra flood insurance. Mortgage Protection Insurance, or MPI, allows your beneficiaries to keep your home even if it still has a mortgage and they are unable to make the payments.
HOA fees – Depending on where you buy your home, you might be part of an HOA. Homeowners Associations are common in residential areas. These organizations are run by the residents and primarily focus on keeping up the appearance of the neighborhood. Some HOA fees cover trash removal, salting and plowing streets for snow and can give you access to exclusive community amenities like a clubhouse, swimming pool, or tennis courts.
Utilities – Sometimes utility fees, such as trash and recycling, are part of your HOA fees. Other utilities like electric, gas, water, and sewer are usually separate. The cost for these utilities varies depending upon how much you use.
Lawncare – Some aspects of lawn care, such as mowing and trimming, can be cheaper to maintain if you do the work yourself instead of hiring a service company to do the work for you. The same is true for raking leaves and shoveling snow when the weather gets cold. Installing an irrigation system can be costly but saves you the effort of having to move a sprinkler around your yard every few hours to water your lawn. Your HOA fee may cover some lawncare expenses, so contact them to see what your payment covers.
Home security – Home security systems aren’t mandatory, but many homeowners utilize them to ensure their home is secure. Some systems like ADT offer indoor and outdoor cameras, smart locks, alarms, and other security features. With many systems, there is an upfront price to purchase the equipment and an ongoing monthly cost to receive the service. Home security should be taken seriously. Take your time to research which company offers the best package for your home.
Being a homeowner comes with the responsibility of taking care of both your family and your property. Some of these costs are necessary, while others may be optional, but each plays a role in maintaining the safety and comfort of your home. By managing your expenses wisely, these costs can easily be integrated into your budget. If you’re ready to become a homeowner, contact Alltru to get preapproval for a mortgage.