Home Purchase Plan Worksheet Page 8
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352.) Hidden Costs of Owning a Home
In addition to the down payment, closing costs and escrow, there are other costs that
you will likely incur at the time of purchase. As a homeowner, you will face costs that
you did not have as a renter. Here are some of the hidden costs of owning a home
that you need to be aware of:
Inspection Fees – Before you purchase a home, you need to pay for a home
inspection, and perhaps additional inspections for pests or radon. The costs of these
inspections are borne by the buyer and are a necessary protection to avoid buying a
flawed property or paying too much for your house. (Section 7 of this Home
Purchase Plan goes into more detail about home inspections.)
Taxes – As a homeowner, you’ll need to pay property taxes, which are generally part
of the escrow you pay into each month as part of your mortgage payment.
Remember, even if you have a fixed-rate mortgage, your property taxes could go up
and increase your monthly costs.
Insurance – Your lender will require home insurance, the cost of which will vary
depending on a variety of factors, including the construction materials of your home
and the location. Even if you currently have renter’s insurance, you’ll find that home
insurance costs more because you are paying for the ability to rebuild your home, in
addition to replacing your personal possessions. Insurance costs can also rise over
time, and you may need supplemental insurance if you live in a flood zone. (Section
8 of this Home Purchase Plan goes into more detail about homeowner’s insurance.)
Homeowners’ Association and Condo Fees – If you buy within a homeowners’
association or a condominium association, you’ll be required to pay a monthly or
quarterly fee. These fees can rise, or your association may need to charge a special
assessment for projects such as repaving the parking lot or repairing a roof.
Moving Costs – You will probably need to pay a moving company or rent a truck to
move your belongings to your new home.
Utility Bills – Depending on where you live now, your costs for electricity, gas and
water could be higher when you move into your own home. Plus, you may need to
make deposits to start your utilities. You may also need to pay for garbage
collection.
Furniture and Decorative Items – While this is essentially a discretionary expense,
most people who move from a smaller apartment to a larger home need to buy at
least some new furniture. You can keep your expenses in this category in check by
waiting for a year or two to buy extra things and carefully comparing prices before
any big purchases.
Lawn Care – Whether you handle your yard work yourself or hire a professional, you
will have to pay something to keep your landscape in check. Lawn equipment can
be costly and, if you have a lot of land, you many need items such as a snow blower
and leaf blower, in addition to a lawn mower. The less mechanized your equipment
Connecticut Department of Labor
Page 8
5/28/2013
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