There are numerous moving parts in home ownership. Beyond the complicated process of applying for a home loan and finding the house of your dreams, homeowners must navigate regular fees and costs in ownership. There’s a lot to consider when buying a home, especially if it’s your first time.
If you’re weighing your options, consider these often-hidden costs of home ownership.
Property taxes are a fluctuating cost of owning a home, determined by the assessed value. These assessments consider the housing market, which rises with inflation over time, and the sale price of homes in your area.
The amount owed is a percentage of the assessed value. The average rate nationwide is 1.1% of the home’s value, but this can vary depending on the area. In Kansas, the average property tax rate is 1.33%.
Some home loans include property taxes in your mortgage, meaning you may not have this “additional” cost until you own the house outright.
HOA and Condo Fees
For residences within a Homeowner Association or condominium association, homeowners will have a regular membership fee. These fees often go toward services that benefit the entire area, like snow removal or garbage service, and may change depending on what the association wants to complete.
Home insurance is fairly expensive compared to typical renters insurance, especially if the home is older or in an area predisposed to certain risks. This amount can also change over time as your home becomes prone to problems, neighborhood changes, or credit changes.
Home Upkeep and Repairs
The general upkeep of a house and property is high among the costs of home ownership. While you may have disliked relying on your landlord to fix issues with your rental property, you may find yourself missing general upkeep being someone else’s problem. You’ll be responsible for your own lawn and landscaping, snow removal, and all-around maintenance of your home’s appliances.
Over the life of your home, you’ll likely need to replace or repair many parts. Many of these large purchases can be saved and prepared for accordingly, but occasional things will come up.
Just like any part of life, there are unexpected parts of homeownership. Despite your best efforts to maintain your home, you may face storm damage, critters in the attic, or various other issues.
Some may be covered by your insurance (while driving up your rate), but the financial responsibility may also fall on you. Because of this, it’s important to establish healthy savings for emergencies.
Is it more expensive to rent or own a home?
The costs of home ownership or renting look different for everyone. You may never encounter a significant issue in your home, or you may find a great deal on a rental property that allows you to make other secure investments. That said, the reverse of either situation could also happen.
Renting is often cheaper but doesn’t come with the same security as home ownership. Rental costs will fluctuate and rise, but you will always know what your mortgage will be. Plus, have equity in the property that will eventually benefit you when you sell.
Discuss Your Home Loan Options with Landmark National Bank
Ultimately, it’s better to consider if renting or owning is better for your current financial situation and goals. If you need help along the way, reach out to the professionals at Landmark National Bank. We can guide you through the home-buying process and discuss options that work best for you. Contact us to get started today!