Many people are aware of the rising costs of buying a home in the U.S., but what often catches buyers off guard are the additional expenses involved in keeping and maintaining a home. According to a recent report by Bankrate.com, the “hidden costs” of homeownership amount to an average of $18,118 annually, or $1,510 a month. These costs include property taxes, homeowners insurance, electricity, internet, cable bills, and home maintenance. What’s even more shocking is that these hidden costs have increased by roughly 26% compared to four years ago, with the same expenses totaling $14,428 annually in 2020. It’s crucial for buyers to understand that purchasing a home entails more than just a mortgage payment.
One of the biggest surprises for new homeowners is the maintenance and repair costs associated with owning a home. Maintenance and repair costs can vary significantly depending on the age and condition of the home. With the aging housing stock in the U.S., many homes being purchased are older and may require system upgrades such as a new HVAC unit, windows, or doors. According to the 2022 American Community Survey by the U.S. Census Bureau, the median age of owner-occupied homes in the U.S. is around 40 years old. This means that many homes may need costly repairs and upgrades sooner rather than later, adding to the overall expenses of homeownership.
The Realization of Hidden Costs
First-time homebuyers, in particular, often underestimate the true cost of maintenance and repairs. Such expenses are part of the learning process of becoming a homeowner. It’s common for new homeowners to encounter unexpected repair bills and maintenance costs that quickly add up. An important pitfall to avoid is spending all your savings on the down payment and ending up “house poor.” This scenario leaves homeowners with little financial cushion for repairs and maintenance, leading to credit card debt or higher interest loans to cover these expenses. It’s crucial to be financially prepared for the ongoing costs of homeownership beyond the initial purchase.
In recent years, many homebuyers have opted to waive home inspections due to high competition in the housing market. However, waiving a home inspection can be risky and not a decision to take lightly. An inspection serves as an essential safeguard to identify potential maintenance tasks and repairs that may be needed post-purchase. By forgoing an inspection, buyers run the risk of moving into a house with hidden issues like a failing HVAC system, water heater, or roof in need of replacement. This oversight can lead to inflated costs and financial strain down the line, making it essential to prioritize a thorough inspection before closing on a home.
The Importance of Financial Preparedness
It’s clear that the true cost of homeownership extends far beyond the mortgage payment. Buyers need to factor in maintenance, repairs, insurance, and other hidden expenses when budgeting for a home purchase. Being financially prepared for ongoing costs and unforeseen repairs is crucial to avoid falling into financial hardship as a homeowner. By understanding the full scope of homeownership costs and planning ahead, buyers can make informed decisions and ensure a stable financial future in their new homes.