There’s no denying that purchasing a home requires a huge investment from buyers. Not only will you need to have a down payment in place, but you’ll need to consider closing costs, home maintenance, property taxes and more over the years. While these are all expenses that most buyers are aware of, there are other “hidden” costs that come along with owning a home as well. In fact, many people say that the true cost of buying a home can be up to 4 times the sale price. So, what hidden cost should you be aware of and why do we think they’re all 100 percent worth it in the long run?
3 Hidden Costs of Owning a Home
- Mortgage Interest
When you look at the amount of money you’ve borrowed to purchase your home, you may be tempted to plan to repay that sum over the next few decades. But you should also be accounting for the interest payments attached to your mortgage loan. Additionally, mortgage interest works slightly differently than the interest on a traditional loan. For example, if your interest rate is 4 percent, you won’t likely be paying that much annually. Towards the beginning of your mortgage, about half of your payment will be going toward interest alone.
- HOA Dues
If you’ve purchased a home that’s part of a “community” of properties or a homeowner’s association (HOA), you’ll be required to pay association dues. While these additional fees are usually disclosed during the sales process and come with a variety of benefits, they can be subject to occasional one-time assessments or special projects that will increase your dues. On average, HOA dues cost American homeowners anywhere from $200 to $400 each month.
- Updated Security
When you purchase a home, it’s in your best interest to change all the locks on the external doors. Unfortunately, there’s really no way to know how many copies of the original keys may be out there, so this is the best way to protect yourself. Additionally, if your new home has a security system in place, you’ll need to figure out how to program it to only be accessed by your computer and smartphone. Previous owners or tenants shouldn’t be able to access the property via their phone!
Are These Costs Worth It?
Yes! While these hidden homeownership costs can be a pain at first, when it comes down to it owning a home is the right choice for many people across the country. As long as you are prepared for the unexpected, homeownership can be a positive experience and a sound investment.