Are you considering purchasing something? Make careful to factor in these five factors of homeowner expenses while doing your math. Homeownership may be a dream for some, but it isn’t for everyone.
Renters make up 37% of all households in the United States, or a little over 43.7 million houses, an increase of 6.9 million since 2005. Despite this, more than half of millennial and Gen Z renters are contemplating purchasing, with 18% seriously considering it.
Both lifestyles have their advantages and disadvantages. So, before you meet with a real estate agent, think about these five homeowner expenses that renters don’t pay – they could make you think twice about purchasing.
Property Taxes
Property taxes must be paid as long as you own a home. Property taxes in the United States average $2,110 per year, making it a substantial — and recurring — part of the budget for homeowner expenses.
To avoid surprises down the line, factor this cost into the calculation from the start. Property tax rates differ by state, so use a mortgage calculator to get an idea of what you’ll pay in your location.
Homeowners Insurance Expenses
Homeowners insurance covers losses and damage to your house due to risks such as fires, storms, and burglary. If someone is wounded in your house or on your property, it also covers legal fees.
In order to obtain a house loan, homeowners insurance is nearly always necessary. For every $100,000 of your home’s worth, it costs $35 a month on average.
If you want to buy a condo, you’ll need condo insurance, which costs between $100 and $400 per year and is distinct from regular homeowner’s insurance.
Maintainance & Repairs
Don’t forget about those little repairs for which you won’t be contacting your landlord. Have you noticed a rip in your window screen? Are you having trouble getting your toilet to stop running? What about the light bulbs that are out in your hallway? You get my drift.
Maintenance charges can add $3,021 to the average American homeowner’s annual bill. Of course, as your home becomes older, this cost rises.
Don’t forget about repairs as well. Conventional water heaters last approximately a decade and cost between $500 and $1,500 on average to replace. Air conditioners normally don’t last more than 15 years, and an asphalt shingle roof won’t survive much more than 20 years.
HOA Fees
Sure, your monthly mortgage payment appears to be manageable, but don’t forget to include homeowners association (HOA) costs.
HOA costs range from $200 to $400 per month on average. They are often used to support amenities such as your fitness center, neighborhood landscaping, community pool, and other common spaces.
As a renter, these pleasures are normally provided, but when you buy your house, you must pay for them on top of your mortgage payment.
Utilities
When you rent an apartment, it’s normal for your landlord or your unit to cover some of your expenses. When you own a home, you’re responsible for everything: water, electricity, gas, internet, and cable.
While several factors influence how much you pay for utilities, such as the size of your home and the climate you reside in, the average American homeowner spends $2,953 per year on utilities.
Depending on your lifestyle, geography, and financial circumstances, renting may be more cost-effective in the end. You’ll make the best decision for your needs if you crunch the figures and factor in these expenditures.