Communicating With Your Real Estate Agent

Recurring Costs: Understanding The Real Costs Of Home Ownership

When thinking about the purchase of a home, buyers often become fixated on the expected amount of their mortgage payment. While certainly important, the mortgage payment is made up of only the base principle and interest payment that is due each month in order to pay off the home's mortgage in the agreed upon amount of time, which is usually fifteen, twenty, or thirty years. But focusing only on this number can lead to an unpleasant surprise for buyers who may find themselves dealing with a home that becomes unaffordable after the purchase. If you are preparing to buy a home and want to truly enjoy the homeownership experience, the following information about recurring costs is sure to help:

What are recurring costs of homeownership? 

As the name implies, the recurring costs of home ownership are those costs that are associated with owning a home, over and above the mortgage payment. These costs include: 

  • home insurance premiums 
  • real estate taxes
  • repairs, maintenance, and general upkeep
  • utilities and services, including electric, gas, water, trash, phone, cable, and internet
  • additional services as needed, such as pool maintenance, lawn care, or cleaning

While tenants are not responsible for many of these costs while renting a home, once they become homeowners they must understand them and be confident that they can pay them from their expected household budget. 

What is a good strategy for dealing with recurring costs of homeownership?

Many of the recurring costs of home ownership are likely to vary from month to month, so figuring them on an annual basis is a good way to handle them. To do this, prospective homeowners should determine the annual cost of each recurring cost and then divide it by twelve months. The resulting number is then added into the monthly budget, along with the monthly mortgage payment to get the entire monthly cost of owning the home.

Since repairs, maintenance, and upkeep figures can be difficult to predict, homeowners may want to use a separate savings account to save money each month toward emergency repair costs or big-ticket repairs that are commonly part of the homeownership experience, such as replacing the roof or installing new carpeting. 

Making sure that the recurring costs of home ownership will be affordable on any home you are considering is an important part of selecting the right home to buy. To learn more, prospective buyers are encouraged to discuss their financial situation and housing goals with their real estate professional before beginning to look for their first home and work together to select a home that will continue to be affordable throughout their ownership.

Contact a real estate agent near you to help you buy a property‚Äč that suits your needs. 


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