As a common people, you only have two options when it comes to live in a place. In recent days, many individuals prefer home buying as the prices are going way down in the real estate market. But if you compare renting with home buying, you can see many hidden costs associated with home buying process rather than just mortgages. There are many more expenses that go into owning a home.
So, if you choose to be a homeowner and seriously want to invest in a new home, let’s take a look at the major costs which can be a burden to you. Identify these costs and try to reduce them for saving thousands of dollars.
What are the major costs associated with homeowning?
1. Property Taxes
Property taxes are one of the main fixed costs which you need to bear in regular intervals. If you've already settled your mortgage payments, still it remains as one of your duties. You must pay it as a fee to the respective housing regulatory authority in which you are living. More or less, you might have to pay $500 to $1000 per month towards property taxes.
Your lender bank doesn’t authorize to fix your property taxes. The federal township authorities can only determines the property tax which will be levied to you. Property taxes are a guaranteed annuity and you can’t ignore it.
2. Risk coverage
If someone gets hurt or had an injury due to your negligence on your property, he can sue you for this incident. You might have a homeowner’s insurance coverage for possible accidents and that will be the only way you can pay off the huge amount of penalty.
There are other risks as well. Mostly for the people who reside in low areas may have huge damage due to hurricane or earthquake. There is a risk of flood for the people who are living near a water body. Basically homeowner’s insurance doesn’t really cover these damages caused by the nature. So, you might need to buy additional insurance for covering those risks. For natural calamities there are number of extra insurance policies available. These policies will cost you on nearly $1,500 to $5,000 annually. This is much more than the basic homeowner’s insurance premium which will cost you between $500 to $1,000 a year.
3. Cost of maintenance
People who lives in a home for a long time, suppose for 30 long years, must have higher repairing and maintenance cost rather than living in a house for 5/6 years. These costs will include roofing, drainage, insulation, cooling and heating, flooring, coloring, sewage system, and many more items.
As a homeowner, you might have to bear some more luxurious items needed for your home. These items may include costly furniture and fixtures, security systems, pricy home equipments, marble counter tops, and many more. The cost of these items can easily make a hole in your pocket and add thousands towards the cost of living. As long as you maintain your home, the cost of owning a home will increase much more during the course of time.
What should you do to minimize costs?
Let us know some steps which homeowners should know to minimize the costs associated with homeownership :
a. Buy as per your need - Buy a new home as per your choice, with all facilities included (if possible). Make sure that whatever upgraded feature you want in your new home, must be included in it before you purchase the property. Avoid underestimating the time and money you’ll spend for refurbishing the new home. Most of the homeowners do such mistakes often.
b. Choose a city or town with lower taxes - Property tax rules implemented on your locality may cost you a big amount of penalties. So it would be better to choose a city or town where property tax rates are quite low. There is another way to save property tax amount. You must move out to a town where recently, within two -three years the tax rates were raised. It is because the authorities might have raised the taxes to create a fund for improvement work. In this situation, for another couple of years the rates will not increase until the reassessment starts or some political pressure arises.
c. DIY home repair - It is not true that every person can be expert in home repairing work or become a master in renovating. Apart from difficult and heavy works like lighting, flooring, insulation, cooling and heating job and many more, an individual can easily do small repairing works all by himself.
d. Buy a condo - If you buy a condo, you doesn't have to bear any work pressure for outside of the home. These works may include trimming the bushes, mowing the lawn, painting the fence etc. The housing rules regarding condominiums restricts any resident to make major changes within the residence.