The costs of homeownership are commonly misunderstood by many first time home buyers. There is a common misperception that the initial down payment is the most significant expense that will be encountered during home ownership. Unfortunately, there are many potentially costly expenses associated with owning a home.
As you plan to take on the responsibility of home ownership, there are some key things to consider when purchasing of your first home. Most importantly, your budget. Don’t just modify your current budget to try and accommodate the expenses your new home. Create a new one. Many utilities, like power and gas, are going to be more expensive in a home than in an apartment. Here are some other important expenses to consider when assembling your new budget:
- City utilities (water, sewer, garbage removal) are generally covered by the landlord when renting an apartment or condo.
- Plan to spend between $4000 and $8000 per year maintaining a $200,000 home.
- Property taxes, based on the value of your new home
- Mortgage insurance
This is not a complete list, but is certainly some of the most overlooked expenses for first time home buyers. Home ownership certainly has its rewards, especially if you go into it with your eyes wide open. Be prepared, plan and budget according, and you will be certain to have a positive experience with your first home.