When you’re considering making the jump to homeownership from renting, there are a few added expenses to consider. Though Merit Real Estate is a huge fan of homeownership, we want to make sure you’re entering into the game with your eyes wide open. Here’s our list of the top five expenses that homeowners have to take on, but renters do not.
On average American’s paid $2,000 annually on property taxes. Your taxes may vary, but they’re typically somewhere around $1 annually for each $1,000 of value that your home is valued. So if you were paying $2,000 in property taxes (like the average American), your property’s value would be around $200,000.
Homeowners insurance can be a relatively reasonable expense but is still something to take into consideration. On your $200,000 home, your homeowners insurance would likely cost you around $70 per month. Like your car insurance though, this premium is based on a variety of factors. You should call and get quotes before making your purchase to make sure you’re aware of the expense.
When you’re a renter you have the luxury of putting in a maintenance request anytime the air conditioning breaks down, faucet leaks, or door gets jammed. When you’re a homeowner, you don’t have that luxury. If you’re considering buying a home, try adding the expenses of each maintenance request you put in to your landlord. Do your research so you know how much you’ll need to spend.
Once you buy, keep 3% of your total property value in savings to cover any potential costs – maybe more if you buy a “fixer upper”.
Homeowners Association Dues
If you buy a home that’s part of a homeowner’s association, you’ll have to pay dues monthly, quarterly, or yearly. Make sure you understand the implications of these dues before you make an offer.
When you rent, sometimes your landlord pays a portion of your utilities. You don’t have that luxury when you’re a homeowner. And if the water softener is out of salt? That’s your responsibility. If the septic tank breaks? That’s another of your maintenance expenses. Keep these potential costs in mind.
To learn more about Merit Real Estate and our realty expertise, visit us online at www.MeritRealEstate.com or call 310-379-4444.