There are costs that are associated with owning a home that families must consider when preparing a monthly budget. The mortgage payment is a significant factor, but not the only cost.
Although there are additional fees with owning a home versus renting, the benefits of wealth through equity can increase personal wealth and family security. Proper budget preparation and forethought of homeownership fees can assist you in choosing a home within budget to increase financial growth. Discovering how to budget costs and what to budget for are the first steps to home management.
What are homeownership expenses?
These are additional costs that must be paid to maintain a home that fall outside the realm of mortgage premiums, insurance, and taxes. These fees are often due monthly and must be considered in the budget as ‘needs’. These expenses can include:
How do I determine if a home requires too much maintenance?
When searching for a home, it is essential to be realistic regarding maintenance costs. Consider the age of the home, local area conditions, the existing condition of the home (not what it may be with renovations), and if it is a single-family home versus a townhome or condo. Single family homes have additional fees associated with maintenance like lawn care, while townhomes or condos often have higher Homeowners Association (HOA) fees for common areas. Work with your real estate agent to answer these questions before putting an offer on a home.
How much should I budget?
There are two common ways to budget for maintenance costs.
Interested in purchasing a home or already own a home? Make room in your budget for maintenance expenses. When in doubt, ask your licensed loan officer to walk you through the process.