Home ownership can be an exciting time, particularly when it is your first. However, one thing that prospective homeowners sometimes underestimate is the financial burden a home can be. While owning a home is still a great investment usually, it will require considerable amounts of money to be spent upkeeping the property. This cost can increase drastically based on a few factors, so make sure you have a good idea of what you will be spending annually to keep your home valuable and safe.

  1. Taxes and Fees. Property taxes can be incredibly expensive. While you will need to investigate the expenses for owning property in your area, forgetting about them can be financial suicide. Sometimes, these will be bundled into your mortgage payments. Either way, make sure that you have a good idea of what you will be paying in property tax. Additionally, there may be things like homeowners association fees which eat into your budget.
  2. Upkeep. One of the major things new property owners tend to be surprised by is how much money needs to be spent on a house to keep it in good condition. Not only will you need to do things like keep the grounds clean, but you will periodically need electrical work, plumbing, roofing, and all appliances will need replacing and repair from time to time. A decent rule of thumb is to keep 2% of the value of the home as the expected yearly maintenance cost. However, if your home is older, or has other mitigating factors, this cost could be higher. A pool, or a large footprint could both increase cost.
  3. Finally, there will need to be expensive repairs which fall outside of normal upkeep which will need to happen periodically. A new roof, or kitchen is a good example. Sometimes, you will need to spend 10-20000 dollars or more at once to make a major repair. It is recommended that you put away a decent chunk of change so that when these large bills come due, you are able to pay them off immediately. A mortgage is generally a fairly reasonable loan, but if you are forced to put repairs on something like a credit card, you will quickly be racking up a lot of interest.

Before you purchase a home, make sure that you take into account more than just the sticker price when budgeting. If you do not have a strong consistent source of income, you may come to regret your purchase.