Immediate Expenses for New Homeowners to Expect

You know you've got a mortgage. But make sure to budget these costs in as well.

After you’ve shelled out the cash for closing costs and a down payment, there are still a few more expenses to expect in addition to your monthly mortgage payment:
 
  • Homeowner’s insurance. Often referred to as “hazard insurance” on mortgage documents, homeowner’s insurance protects your investment (and the lender's) from losses in the event of property damage, theft and even liability. The cost of homeowner’s insurance varies widely depending on which company and policies you choose, but you can often save money by bundling your homeowner’s insurance with your auto insurance.
  • Property taxes. For many homeowners, property taxes are the second-largest expense of owning a home (after mortgage interest). In most areas, property taxes are governed by state law, but assessed and collected by the county on an ad valorem basis (ad valorem is Latin for "according to value"). They are calculated annually by applying a certain tax rate to the assessed value of the property.
  • Private mortgage insurance. If your down payment was less than 20 percent of the mortgage value, you have to pay PMI, which protects the lender against your defaulting on the loan. This can add as much as a couple hundred dollars per month, depending on the size of your loan.
  • HOA fees. If you bought a home in a community with a homeowners association, be prepared to pay HOA fees, which cover maintenance of the community’s common areas. Fees vary widely depending on where you live and what amenities your community offers -- anywhere from $150 a month to as much as $2,000 a month for some luxury buildings in Manhattan.
  • Utilities. If you’re a former renter, you’re probably already used to paying utilities. However, extra square footage can make utility costs for a home much more expensive than an apartment.
  • Cable, Internet, telephone. In addition to the monthly costs of these services, be prepared for initial set-up costs.
  • Appliances and furniture. If you don’t already own them and they weren’t included in the purchase of your home, be ready to equip your home with furniture, appliances, window coverings, lighting and anything else you need to get settled in.
  • Home maintenance necessities. As a new homeowner, you’re now responsible for mowing your lawn, cleaning the gutters and making repairs. Be prepared to purchase a lawnmower, a set of tools and anything else you need to keep your home well maintained.

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