Considering Buying a Home? Don’t Forget These 5 Additional Expenses
The dream of homeownership is appealing to many, but it’s important to weigh the financial implications before committing. Renting remains a popular choice for 37% of American households, but more than half of millennial and Gen Z renters are considering purchasing a home. To help you make an informed decision, consider these five additional expenses that homeowners face but renters do not:
Owning a home means paying property taxes. The average U.S. homeowner pays $2,110 per year in property taxes. Use a mortgage calculator to estimate property tax costs based on your location.
Homeowners insurance, which covers damages and legal costs associated with incidents in your home, is typically required for obtaining a home loan. Expect to pay an average of $35 per month for every $100,000 of your home’s value. Condo owners will need separate condo insurance policies, costing between $100 and $400 per year.
Maintenance and Repairs
Homeownership brings the responsibility of maintaining and repairing your property. Maintenance costs can add around $3,021 to a U.S. homeowner’s annual expenses. Factor in the costs of replacing appliances and systems, like water heaters, air conditioning units, and roofs, as they age.
Homeowners association (HOA) fees can add $200 to $400 per month to your expenses. These fees cover amenities like fitness centers, landscaping, community pools, and other common areas, which are typically included in rental costs.
Homeowners are responsible for all utility costs, including water, electricity, gas, internet, and cable. The average U.S. homeowner pays $2,953 in utility costs annually.
Renting may be more cost-effective depending on your lifestyle, location, and financial situation. By accounting for these additional expenses, you can make the right decision for your needs.
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