Apr 11 2023

9 frequently overlooked costs of owning a house

owning a house
owning a house

Accounting for out-of-pocket expenses can help you feel prepared for your purchase.

There are plenty of benefits to homeownership. Some are financial, like getting the opportunity to build your prosperity by accruing home equity. Others are non-financial and might include cultivating a sense of pride, community, security, and purpose.

But these benefits won’t mean much if you don’t know what you’re getting into. While many homebuyers are aware of the upfront costs that may come with owning a house—like a down payment and closing costs—some are surprised to find out the true monthly cost of homeownership, beyond their mortgage payment. We’d like to help you avoid that.

Here are all the added costs of owning a house

Get acquainted with some of the most common costs attached to homeownership:

1. Utilities.

If you’re renting, you probably already pay monthly utilities. Exactly which ones should be detailed in your lease. But when moving from an apartment to a single-family home that potentially has more square footage, monthly utility bills are likely to increase. Energy costs are rising around the world.

2. Home insurance.

While homeowners insurance isn’t mandated by law, most lenders will require that you have a policy in place before closing on your mortgage. Like other insurance plans, coverage and premiums can vary. The average monthly cost of home insurance in the U.S. is $126. You might pay more if your home is older or if you have a pool. Flood insurance, if needed, is a separate, added policy.

3. Home security.

For many homeowners, a security system provides peace of mind. For others, it’s a necessity. Depending on the features, size, and provider, a home security system may cost several hundred dollars upfront and up to $50 per month for monitoring.

When you’re ready to set up utilities, internet, homeowners insurance, home security, and more: Academy Connect can help.

4. Cleaning.

Hiring housekeepers isn’t a requirement. But many busy homeowners find outsourcing this task to be worth the investment, compared to the time it takes to keep a house clean. Monthly housekeeping may cost around $200, though going rates will depend on the size of your home and your local area.

5. Property taxes.

While paying property taxes is unavoidable, you do have the option to appeal. Disputing your annual property taxes—which could range from around $500 to over $8,000, depending on your state—has the potential to lower this bill. Property taxes go toward community services, like schools and police and fire departments. But if your home has been overvalued, you might be overpaying, and an appeal is worth looking into.

6. HOA.

Over half of homes are estimated to have a Homeowners Association (HOA), and monthly fees may run you $250 on average. These fees cover a number of community amenities, including pools, parks, and security, which can vary based on location. If you’re considering a home with an HOA, make sure you understand how much you’ll be charged so you can budget for it.

7. Emergency repairs.

One of the main differences between owning a house and renting one comes down to your level of responsibility. As a homeowner, you’ll have full creative control to paint and customize any way you’d like. But when the dishwasher breaks, you’ll also be responsible for replacing it. Setting aside at least 1 percent of your home’s value—ideally, each year—for unforeseen repairs is recommended.

8. Maintenance.

Maintenance differs from home repairs in that it’s what you need to do each year to keep your home in good shape. Examples might include pest control, tree trimming, lawn care, HVAC servicing, and chimney sweeping. While each of these services comes with its own price tag, regularly maintaining your home can help to reduce wear and tear and may decrease the likelihood of costlier repairs being needed.

9. Upgrades.

Home upgrades aren’t a must, but homeowners who plan to stay in their property for the long-term often budget for renovations. Some popular updates, like kitchen remodels, even have the potential to improve your home’s value. You can save up and pay for planned improvements in cash, or you might consider a cash-out refinance to fund renovations, depending on how much equity you’ve accumulated.

Bottom line: Though added costs come with homeownership, owning a house typically makes financial sense for those who are prepared to do it. Mortgage rates have recently increased, but since 1988, rents have also been steadily rising. Becoming a homeowner can give you the chance to avoid rising rents by locking in your monthly housing expense. In this way, homeownership is viewed as a reliable hedge against inflation.

We’re here to make your dreams of homeownership possible

What it takes to get you home is going to be different for every homebuyer. Some buyers might benefit from a low or no down payment loan, while others may see more savings from using a Temporary Buydown to reduce their rate for the first two years. Contact a local Academy Loan Officer for affordable mortgage solutions and customized guidance.

This is for informational and educational purposes only and not intended as an advertisement as defined by Regulation Z. Please consult a trusted professional as personal circumstances may vary. No specific results are guaranteed. MAC1024-2179553.