The Hidden Costs of Buying a Home in 2021

Melissa Aguilar

Melissa Aguilar

Hidden buying home costs
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Saving up for a down payment is just the first big step to becoming a home owner. Sure you know you’ll have to pay your real estate agent, closing costs, and inspection fees. But there are tons of other hidden costs of buying a home that you should be aware of before signing on the dotted line.

Insurance

Homeowner’s insurance will usually protect your property in case of damages due to natural disasters, theft, or vandalism. But you should still compare plans to see how much they cost and how much coverage they will provide.

You might also need to invest in flood or earthquake insurance depending on your area. Some features on your property, like a swimming pool, may require additional liability insurance.

If you’ve made a down payment that is smaller than 20 percent of your home’s value, you may also be required to purchase additional mortgage insurance.

Taxes

Now that you’re a homeowner, you’ll have to pay property taxes, which can vary by your county or even by city. Use a property tax calculator to get a better idea of how much you’ll need to budget for taxes.

Many people set up escrow accounts, which allow you to set aside money throughout the year to pay for insurance and taxes. Otherwise, it might be more difficult to come up with a large one-time property tax payment every year.

Maintenance

Unlike when you’re renting, if something goes wrong with the house, it’s up to you to fix it. You might face anything from a broken pipe to a leaky faucet or an ageing roof. Hiring a repair person can be expensive, especially if it’s a problem that needs to be fixed immediately.

Depending on the type of property you own, you’ll also be in charge of paying and keeping up the yard. You’ll need to factor in water costs of keeping a green lawn, outdoor maintenance tools such as a lawnmower, or paying a landscaping company to design a manicured garden or backyard space.

Lifestyle creep

If you’ve been used to living in a smaller living space and move into a bigger house, you’re suddenly faced with much more space to fill up. You’ll need more furniture or design elements like wall decorations to make your living area feel homier.

A bigger living space will also mean more expensive utility bills, so be sure to budget for those as well.

Time costs

Buying a home doesn’t just take up financial resources, but also a lot of your time. You will have to find the time on Saturday morning to cut the lawn, to call and meet with the air conditioning repair people, or to paint the bedroom a new color.

Becoming a home owner for the first time can come with a lot of extra costs. Being aware of them and planning for them ahead of time will ensure you stay on budget and on track for your financial goals.