Have you budgeted for the true cost of homeownership? Let’s take a look at upfront and ongoing costs you might not have thought about.
Written by Zach Hewke, Edited by Sabrina Lopez
Editor’s Note: This is the first of two parts, with the second to run in our Wednesday, April 5 edition
When you’re budgeting to purchase a home, there is much more to consider than just the down payment you’ll make or your monthly mortgage payments. Here, we review the hidden costs of buying and owning a home.
The Major Costs of Buying a Home
When purchasing a home, there are both direct, upfront costs and indirect, ongoing costs associated with the purchase. Before you sign the dotted line, it’s important to know exactly what these costs are and how they may manifest.
Upfront Costs of Homeownership
Upfront costs are costs you pay when you initially purchase your house. Although most people think they just need enough money to pay for a down payment on a house, there are other costs that have to be paid upfront. These should be spelled out in a cost summary provided to you by your mortgage originator.
Some of the most significant upfront costs associated with purchasing a home are:
- Closing costs
- Down payments
- Moving costs
- Reserves
In addition to these upfront costs, there are many ongoing costs of owning a home.
Ongoing Costs of Homeownership
While most people budget for upfront costs when buying a home, there are quite a few additional expenses that most people overlook.
These costs may or may not be within your control. For example, if you move to a community with an HOA, you will need to pay that fee monthly. There are other factors that you do have more control over, such as maintenance and repairs.
Some of the most common ongoing costs of homeownership are:
- HOA and condo fees
- Home maintenance, repairs and utilities
- Homeowners insurance
- Mortgage insurance
- Mortgage payments
- Property taxes
Some of the most significant upfront costs associated with purchasing a home are:
- Closing costs
- Down payments
- Moving costs
- Reserves
In addition to these upfront costs, there are many ongoing costs of owning a home.
Ongoing Costs of Homeownership
While most people budget for upfront costs when buying a home, there are quite a few additional expenses that most people overlook.
These costs may or may not be within your control. For example, if you move to a community with an HOA, you will need to pay that fee monthly. There are other factors that you do have more control over, such as maintenance and repairs.
Some of the most common ongoing costs of homeownership are:
- HOA and condo fees
- Home maintenance, repairs and utilities
- Homeowners insurance
- Mortgage insurance
- Mortgage payments
- Property taxes
