The Real Cost of Home Ownership

Buying a house is like having a baby. It is a time filled with the thrill of the chase, the excitement of selecting a new home, and the fear of how you are going to pay for it. Most people only want the finest finishes or the stateliest house. The truth is very few of us can afford homes like these, and we will go bankrupt trying to pay the mortgage on them. If you are looking to buy a home, it is good to start by putting pencil to paper and figuring out how much house you can really afford.

Local Property Taxes

You thought you owned the land you paid for. However, the governmental authorities in the area have the right to charge you a yearly fine, tax, or lien for the land you own. Although you may not like paying it, the money is used to pay for schools, roads, and running the local government. The amount of property tax you pay will vary based on your location as well as the value of your property. You can contact your local tax accessor to find out your community’s property tax rate.

 Home Owners Insurance

Similar to insurance when you buy a new car, home owners insurance is protection for your home. The policy helps you replace or repair your home if it is damaged by a natural disaster. In addition, some policies provide coverage for damage to your personal belongings and liability coverage. This is useful if someone gets hurt on your property or by one of your pets.

 Private Mortgage Insurance

While home owners insurance is protection for you, private mortgage insurance is really protection for your mortgage lender. With the last housing market bust and recession, many lending institutions found themselves with a lot of defaulted or foreclosed loans. Private mortgage insurance guarantees the lender will be paid in the event you should default or stop paying on the loan. Buyers only need to worry about mortgage insurance if their downpayment is less than 20% of the home’s value or if their lender requires it.

 Home Owners Association Fees

If the property you love is part of a gated community, a townhouse, or condo, chances are you will have to pay HOA or home owner association fees. The Home Owners Association is a group that sets up the rules and restrictions for the community as well as looks out for the interests of all the property owners. Your fees help run and maintain the community and are normally used for the upkeep of common areas, including sidewalks, community buildings, pools, etc. the amount of HOA fees will vary based on location as well as the cost of the HOA’s latest project, like replacing the roof on the community center.

 Maintenance and Repairs

Unlike renting where maintenance men are on call 24 hours a day, being the homeowner means you are the maintenance man. You will not only have to do the work yourself, but you will have to pay for all the materials and tools needed to complete the job. That is unless you pay someone to do the job for you. Putting money in savings each month helps insure you have money for unexpected repairs or appliance replacement.


For some homeowners, paying for water, gas, electricity, and trash pickup will be a foreign concept. Unlike apartment living, homeowners are responsible for deposits to these utility companies in addition to monthly payments for using their services. This will greatly increase the amount of money needed before moving into a new home.

If you are considering buying a home, be sure to look at all of the costs before signing on the dotted line. For more information on buying or selling a home, find us at

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