On average, an American has to pay an extra $9,000 as hidden costs. New homeowners are only focused on the asset’s price and mortgage rates, but there are some other hidden costs when you buy a new house. These hidden costs can cut a big chunk from your monthly budget and the only thing you can do to is to be prepared to pay the dues. It is very important to calculate these hidden costs before buying your new home and see if you can really afford the house.
So, here are a few hidden costs that may disrupt your monthly budget.
5 Hidden Costs of Home Ownership
The first hidden cost that may disrupt the budget is the property tax. When you buy a new house, you’ll have to pay property tax on a monthly or quarterly basis. This tax rate depends on the state or the city you live in.
You’ll have to calculate the tax rate before you buy a house. You should remember that your property tax rate shouldn’t go up more than 25% of your home payment. However, property tax payment can start any where from $500 to $1000 based on the value of your house. The tax can even cross $1000 a month.
Maintenance and Repair Costs
When you finally buy a new house, you’re now in charge of your home.That means, you’ll have to pay the entire repair and maintenance costs by yourself. It is common in houses that when one system is broken or needs repair, other equipment of your home also needs repair after a certain time. It’s a snowball effect. So, you should be prepared for this. So, it’s better to use the equipment correctly and more carefully to avoid these maintenance and repair costs.
Before you buy your dream house, you’ll have to go through a home inspection. This inspection will require you to pay a small fee. However, you’ll need extra fees for pest and radon tests. This inspection is necessary because it’ll protect you from buying a flawed house. Also, you’ll be protected from paying too much for the home. So, you’ll have to add these inspection fees to your budget; in addition to the mortgage rates and price of the house.
While buying a new home, insurance plays a key factor. Your bank will tell you to give them the insurance papers if you’re buying the house with a loan. Insurance depends on various factors, such as the location of your home and the construction materials that are used in your house. However, insurance fees can go up as time passes. Again, if your house is located in the earthquake or flood zone, you’ll require supplemental insurance.
After all the paper work is done, you can now move to your new house. But to move from your old home to the new one, you’ll have to hire a truck or a moving company. So, you’ll have to add this cost to your budget. Again, your gas and electricity bills can be higher than the city you lived in before. Also, you’ll have to pay for garbage collection, phone bills, and internet bills. So, you’ll have to add these as well. These are the few hidden costs of home ownership. You can use a mortgage calculator to estimate the true cost of buying a new house. However, it may cost you more than you think because of these hidden costs.0