But many of the ancillary costs of homeownership take homeowners by surprise, including property taxes, insurance, utility bills, and more. Homeowners can spend more than $9,000 per year on these hidden homeownership and maintenance costs. You don’t want to fall in love with a home only to find out that the cost of living there will have you over-extended. Here’s a guide to the line items you should be considering, so you’re not shocked when the bills start arriving.
As you close on your mortgage, get ready for these costs: Legal fees and title insurance. Typically this will run you somewhere between $1,000 and $2,000 depending on the size of your purchase.
In general, you should plan on paying 1 to 2 percent of the value of your home every year in maintenance and upkeep, according to the Harvard University Joint Center on Housing Studies.
But that number varies, upkeep on condominiums or attached townhomes tends to be lower than single-family homes on their own land. Some of the most common maintenance requests were house cleaning, yard care, gutter cleaning and pressure washing. Prices do vary widely based on location. Your agent and home inspector can help you estimate what routine jobs will cost in your neighborhood and area, especially when it comes to first-year costs.
Property taxes don’t just vary by province, and they’re not stagnant — they also increase or decrease based on city, ordinance, and even specific house. If you believe your property taxes are higher than they should be compared with other homes in your area, you can hire a lawyer to help grieve your taxes (usually for a percentage of the money that person saves you). You can also do it yourself and save the fees.
Utility costs can be as high a number as property taxes running a couple hundred dollars or more.
Estimates change with climate. To get a clear sense of what to budget, ask a friend with a home in the neighborhood you’re considering to give you a peek at his or her monthly bills, making sure to adjust for the size of their home versus yours. This can also be eye-opening when it comes to lawn care, water bills, and even the local price of groceries.
If you’re getting a mortgage, you’ll be required to have homeowners insurance. And even if you pay cash for your home, you should have it anyway. You’re best off buying a replacement cost policy which will cover the cost of replacing the items that get stolen or damaged in a fire, rather than one that gives you the depreciated value of the items lost.
You can save yourself a significant amount by shopping around, both online and off. And ask about what discounts you can get, including discounts for security systems, working from home, and bundling coverage for your home with your auto insurance policy.
Finally, be aware of the limitations of homeowners insurance. Policies tend to only protect a home and possessions within, but if you’re buying a condominium, the co-op might require a liability rider for accidents on the property. And if you’re in a flood zone, you’ll need flood insurance as well.