There’s nothing quite like the excitement and pride of going through the home buying experience. After all, for many individuals, the decision to purchase a home signifies a major financial and personal milestone. In 2018 alone, more than 5 million homes were sold in the U.S. according to the National Association of Realtors.
Instead of taking into consideration the full potential cost of owning a home, buyers tend to focus their attention on just the listed “home price” or monthly mortgage rate. And while this information is certainly important to know, it can easily blind you into ignoring the financial reality of what your dream home may actually end up costing.
Before picking out paint colors and organizing your list of must-have décor items, be sure to consider these top 5 unexpected homeowner expenses that are likely to tap into your wallet at some point or another.
1) Property Taxes & Homeowners Insurance
When you hear the word “taxes,” you probably already have your calendar marked for April 15th. However, when it comes to property taxes for your home, you may not feel quite as prepared.
So, what exactly are property taxes? Property taxes are an added yearly expense that homeowners are required to pay to their local government. Calculated by the overall value of the property, including land, these taxes can vary greatly depending on the homeowner’s state and county location. Within the U.S., the average yearly cost of property taxes is around $3,000.
Now aside from property taxes, you’ll also need to invest in homeowner’s insurance. After all, it’s important to protect your biggest asset from any unexpected damage or losses. For many new homeowners, especially those who were previously renters, the added cost of homeowners insurance can come as quite a shock. Thankfully with such a wide range of insurance policies to choose from, you can easily find one that fits your needs and budget.
2) General Home Maintenance
A major perk of becoming a homeowner is that it’s your property to do with as you please. But with that newfound freedom comes the responsibility of maintaining your property. This means that when something goes wrong, regardless of size or severity, you are now responsible for fixing it.
Depending on the age of your home, a good rule of thumb for covering potential maintenance costs is to save 1-4% of the total home purchase price each year. For example, let’s say you purchased a home for $300,000 and it’s less than 5 years old, it’s probably safe to save only 1%, which equates to $3,000 a year.
On the other hand, if you’ve purchased a home for $300,000 but it’s more than 20 years old, you’ll want to raise your yearly savings closer to that 4%. The older a home is, the more likely you’ll run into an issue that calls for repair or replacement. This would mean that to cover maintenance costs adequately, you’ll need to save around $12,000.
Having a financial safety net can help ease some of the stress that comes when dealing with unexpected home expenses.
3) Replacing Major Appliances
It always seems to happen at the most inconvenient time for you and your budget; one of your major appliances just stops working.
A majority of common home appliances have an average lifespan of about 10 years. Knowing this, you may find yourself replacing one or more of the key players in your home more frequently than anticipated. The chances of replacement are higher if you’ve purchased an older home in which the appliances are already several years old.
4) Dealing with Pest Control
There’s nothing worse than having an unwanted house guest, especially if, say, that houseguest has eight legs, prefers cheese, or brings along hundreds of friends.
Pest control is a common unexpected expense for many homeowners. On average, a visit from an exterminator will typically cost between $250-$400. Depending on the type of pest control needed and the severity of the problem, you may find that a one-time visit will do the trick, or may require monthly or quarterly service.
5) Investing in Your Yard
One of the biggest curb appeal factors for any home is the general appearance of the surrounding landscape. Routine maintenance of mowing the grass, planting, pulling weeds, mulching, watering, fertilization, and trimming bushes and trees are all essential to the health and vitality of your yard. There are also those seasonal chores based on where you reside, which could include raking fallen leaves and snow removal.
Many homebuyers don’t consider the additional cost of landscaping, including yard equipment, materials, furniture, or hiring a professional contractor. If overwhelmed, it can be easy to overlook or ignore your yard care. If you are part of a Homeowners Association, you could even be fined if you are in violation of community policies.
Expect yard maintenance costs to vary between $130 to $400 per month. The larger your property, the more time and budget you’ll need to devote to caring for your yard. According to HomeAdvisor, Homeowners spend approximately 5-10 percent of the value of their home on landscaping. (HomeAdvisor)
Need Help with an Unexpected Home Expense?
With all the added costs of being a homeowner, it can be easy to feel financially overwhelmed. If you find yourself dealing with an unexpected home expense, consider a personal loan from Credit Direct. Our application process takes just minutes to complete with no effect to credit score.