Home Ownership Is More Expensive Than Just a Mortgage
The hidden costs of buying a home are no secret in themselves – they are costs that are difficult to predict if you are in the process of buying a home.
Spectora, a home inspection software service, analyzed home ownership costs as part of the American Housing Survey , which the Department of Housing and Urban Development and the Bureau of the Census conduct every two years.
The company identified the main hidden costs of home ownership in the metropolitan areas with the largest populations based on responses to a survey of more than 45,000 housing units in those areas. While the AHS investigates all types of housing units (apartments, houses, etc.), some of the reported expenses tend to only concern homeowners.
Here are some of the average monthly costs you want to see on your radar:
Utilities
National average: $ 361 per month Highest median: Boston, $ 439 per month, Lowest median: San Francisco, $ 246 per month.
Utilities include water, gas, electricity, fuel oil, other fuels (solar, wind) and garbage collection. It’s no surprise that heating a home in the winter in Boston or New York can get expensive, but not all utility costs are obvious. In places like Miami, Dallas and Phoenix, waste collection costs were higher.
If you’re trying to get an idea of utility costs in an area outside of the most crowded metro areas, Bankrate’s Cost of Living Calculator is a never-ending feast at varying costs.
Homeowners’ Association Fees
National average: $ 62 / month Highest median: New York, $ 358 / month Lowest average: Detroit, $ 25 / month
If you are considering buying a home in a building or area that has an association of homeowners for service, now is a good time to remind you that these median amounts are the midpoint for what people are reported to be paying. These fees are not tax deductible, although some legislators have tried to change this.
Property tax
National Average: $ 200 / month Highest Average: New York, $ 600 / month Lowest Average: Atlanta, $ 150 / month
This is a category in which your chances of cutting costs are slim if you are not planning to change cities.
Home insurance premiums
National average: $ 67 / month Highest median: Miami, $ 119 / month Lowest median: Phoenix, $ 58 / month
If you are going to buy a home, you will need cash to buy insurance. Sorry Miami, it’s hard to be in a hurricane zone.
Spectora has invested in spending to determine the total monthly average cost of hidden homes. I disagree with the inclusion of travel costs because driving is far from unique to home ownership. If you buy a home in the metro area where you are renting, your transportation methods and associated costs are likely to remain in the same range.
You might say, “But I rent and pay for utilities! To hell with home ownership! ”And I have no doubt about it, but there are so many variables that could get you hooked on a rental. Compare that to home ownership where you are totally dependent on all of these utilities.
If, based on this report, the median national incremental homeownership costs are $ 875 per month, then you can use that as a target for your budget, in addition to paying off your mortgage. If you plan on buying from one of the more expensive locations, plan accordingly.
This is not a comprehensive guide to hidden costs. Ongoing maintenance. Unexpected plumbing repairs. Maybe a yard. The fact is that you suddenly have 17 windows that need to be covered with something.
But if you start to cut your budget to anticipate your post-close expenses, these statistics can help you anticipate what you might face in your part of the country.