The Hidden Costs Of Homeownership
Saving up for a down payment is not the only action you need to take before buying a home. Down payments and mortgages are not the only costs you’ll run into. Most homeowners pay an average of $9,080 each year on taxes, maintenance, and insurance. Zillow, the popular website for those looking for a new home, reported earlier this year that most new homeowners surpass their budget by as much as 40% thanks to unexpected costs. The numbers vary by location. According to Forbes, homeowners in San Fransico pay an average of $13,000 for taxes, insurance, and utilities while homeowners in Indianapolis pay an average of $4,700.
All too often, new buyers look at the ticket price of a home and assume that’s the most they’ll ever have to pay. For starters, you have to remember that your mortgage is going to include interest, so you’ll actually be paying more than the ticket price. Then you’ll have closing costs – usually between 2 and 5% of the home’s ticket price. You also may need to pay to have your home inspected before you purchase or move in.
On top of your initial and more obvious costs, you’ll have to leave room in your budget for maintenance, utilities, and Homeowner’s Association (HOA) fees. If you live in a community, you’ll likely have an HOA fee that covers pool use, elevator breakdowns, landscaping, and other costs of that nature. No matter where you live, you’ll have to pay for home maintenance and utilities.
Taxes and Insurance
Your tax costs may be outlined for you before you buy the home, but your insurance won’t be. Tax rates vary among states – the lowest is Hawaii at .32%, and the largest is New Jersey at 2.31%. Insurance rates have several other factors, like the amount of coverage you want, your credit score, your geographic area (and its weather patterns), neighborhood crimes, and the home’s age and condition.
For help with your homeowner’s policy and other insurance needs in Tennessee, contact our InsureTN agents at 615-964-5250.