A lot of people bought their first homes during the pandemic after the authorities lowered interest rates. A home is a valuable asset and can be a good first step towards stability. Many people took advantage of the favorable financial situation to escape paying for rent every month. But they may not have considered the other expenses associated with owning a house.
Here are the things you should consider when you are planning to purchase a house.
You need to pay property taxes. The local government determines the property taxes a homeowner needs to pay. Taxes can range from $500 up to $1,000 per month, and it’s based on the assessed value of your home.
As of 2018, New Jersey has an effective tax rate of 2.21 percent, which is the highest in the country. Illinois and New Hampshire follow New Jersey with tax rates of 2.05 percent and 2.03 percent, respectively. On the other hand, Hawaii has the lowest tax rate of 0.3 percent, with Alabama coming in at close second at 0.4 percent. In third place for the lowest tax rates is Louisiana at 0.52 percent, followed by Wyoming at 0.55 percent.
Another hidden cost of homeownership is homeowners’ insurance. But it is not unexpected since mortgage companies and banks require you to get one before they approve the loan. Your mortgage payments normally include the homeowners’ insurance premiums. These premiums are typically paid using your escrow account, similar to property taxes.
You should remember that these premiums increase every year. It also increases when you increase your homeowners’ insurance coverage due to an increase in the value of your property. The insurance is useful in case your home gets damaged. But you should remember that the insurance does not cover disasters, such as earthquakes or floods. In these cases, you need additional coverage, especially in areas where these natural disasters happen often.
Homeowners’ Association Fees
If the home you are eyeing is located inside a homeowners’ association (HOA), you need to take the fees into account. You can pay the fee either on a monthly or quarterly basis, depending on the guidelines of the HOA.
The HOA fee covers the cost of services for the whole neighborhood. These services include garbage collection and plowing of snow in winter. Similar to HOA fees, if you live in a condominium, you also need to pay for condominium fees. These fees can also go up whenever the association works on a project, like installing a security system or fixing common buildings or areas.
Owning a home means you are responsible for maintaining it. And one of the things you need to maintain is the plumbing of the house. If you bought a newly-constructed home, you will not likely have much maintenance to perform. You can even work on the plumbing yourself.
But if a major plumbing project is necessary, you should get the services of a reliable plumbing contractor. These professionals have the experience and equipment to deal with any issues in the plumbing of your home. They are also licensed and insured.
These major plumbing issues will likely come up when you buy older homes, especially those built decades ago. Some of the major issues you should look out for are clogged pipes due to mineral deposits and lead contamination in the plumbing.
One of the biggest issues that homeowners have to deal with is water. And the roof is one part of the house that keeps water out. A leaky roof can cause cosmetic problems inside the home. If the leak is small, you may not notice it until you visit the attic and find your personal belongings destroyed. You may even start noticing it when you see a slight discoloration on the ceiling.
You should check your roof regularly since a leaky roof can also cause structural issues and health problems. These issues typically happen when the shingles on the house are loose or cracked. While it takes around 15 to 20 years before you should replace asphalt shingles, you should still check for any damage right after a major storm in your area.
HVAC System Maintenance
The heating, ventilation, and air conditioning (HVAC) system is important to make your home comfortable during summer and winter. You should check it regularly if it’s an old unit, especially before summer and winter. You may even need to replace the filters to ensure the system runs properly.
Owning a home might have many perks, but you should also consider the hidden expenses that come with it.