Home ownership is an attractive idea but there is more to think about than mortgage payments. Many homeowners have thought they had sufficient savings and been surprised at the hidden costs of their home. We’ve put together this guide to take you through the various stages of home ownership and address the various expenses associated with each.
Purchasing a Home
There is more to purchasing a home than mortgages and down payments. Before you sign anything be sure to have your potential new house appraised and inspected for pests, wiring or plumbing problems, structural issues and other flaws that can be easily hidden from the untrained eye.
Closing costs are an extra (and often unexpected) expense at this stage. It is sometimes possible to negotiate with the seller for them to cover some of these costs but it is likely that you will have to pay anywhere from 2-4% of your mortgage amount, depending on your area.
Finally, you will need home owner’s insurance which will cost more than renter’s insurance as it not only provides for replacing personal items but also for the ability to repair or rebuild your home. If you live in an area prone to flooding or earthquakes, you may require supplemental insurance.
Moving can be a stressful, and expensive, experience but it’s worth it to get into your brand new home as long as you plan for these expenses ahead of time. There are several things to keep in mind when moving:
- Moving day costs such as:
- Deposits to start utilities;
- Fees to move internet, cable,and phone services to your new address; and
- Movers (or friends) to get your personal items from point A to point B.
- Home improvements:
- Before moving in, you may opt for some repairs or improvements, such as window replacements for energy efficiency, painting or the replacement of old wiring
- Décor and Furniture:
- Either before or after you move into your new home, you are likely going to want to change the décor in at least one room. Keep costs down by focusing on the rooms you will spend the most time in.
- Moving from an apartment or condo into a house can mean plenty of extra space that needs filling. Again, start with the rooms that will get the most use and deal with that extra guest bedroom once your bank account has recovered!
- Another one of the perks of owning a house is your very own yard but that will need some filling too! Barbecues and lawn chairs can be expensive purchases but often go on sale at the end of the season so consider holding off to get a great deal.
Upkeep and Maintenance
This is the area of home ownership that really sneaks up on people. Make sure to always have money in an emergency fund just in case as you never know if your air conditioner will fail in the middle of a heat wave or the heating stop working in the dead of winter. As the owner, it will be your responsibility to have these problems solved and emergency repairs can be costly. In fact, the most expensive part of home ownership is usually unexpected repairs such as replacing or repairing the roof.
Everyday upkeep will also cost you time or money and probably both. It will take more time to keep your house clean and it is your responsibility now to clean the outside of the windows and keep the yard tidy. Snow blowers, leaf blowers, lawn mowers, and trimmers may all be needed to keep your yard looking its best.
The longer you live in your home, the more likely you will need to pay for some home improvements such as energy efficient appliances or replacement windows or doors. Consider these costs carefully; they may seem prohibitively expensive at first but they will save you more in the long term the sooner you get them done. You are likely to notice increased electricity bills if moving from an apartment into a larger home and properly insulated windows and doors as well as new energy efficient appliances and plumbing will help to cut those extra costs. A plumber in Oakville or any other region in Canada, can definitely come in handy.
As a homeowner you are also a property owner and will be required to pay property taxes which may increase over time depending on your area.
You may eventually want to sell this property so be wary of the value of the property you are purchasing. Property value can be affected by the land around you and changes to those properties will increase or decrease the value of your purchase. Do some research on the owners of the land and what the zoning laws are so you can choose a home in an area that is likely to increase in value.
Home ownership can be both rewarding and profitable if you are prepared for the initial and ongoing expenses. Now that you know about these extra hidden costs, you are ready to save your money and buy a home with confidence!