5 Hidden Homeownership Costs That Catch Buyers Off Guard After Closing
Many Americans focus on mortgage payments when calculating the cost of buying a home. But several "hidden costs" can add thousands of dollars to annual housing expenses. According to a recent Clever Real Estate study, these often-overlooked costs total $23,686 per year for the average homeowner.
Here's a look at the five most common hidden costs homeowners face.
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1. Utilities
According to the study, the average homeowner spends $7,679 a year on utilities.
"Electricity, water and natural gas have all gotten more expensive thanks to inflation, fuel costs and infrastructure investments," said Kristen Herhold, director of public relations at Clever Real Estate.
2. Maintenance
As a renter, your landlord typically covers maintenance costs. But as a homeowner, you can expect to pay an average of $5,162 a year to maintain your home.
"Labor and materials are up across the board and skilled trades remain in short supply, so when you need a roofer or an HVAC tech, you pay more for the work," Herhold said. "A new HVAC system costs at least $5,000 and a new roof can be $10,000 or more. Most buyers know these things will eventually need replacing, but they don't budget for the actual price tag or build a savings cushion."
3. Renovations
The average homeowner spends $3,929 a year on renovations. Although these upgrades and improvement projects are optional, they help maintain or increase a home's value.
4. Property Taxes
Another hidden cost of homeownership is property taxes, which add up to $3,580 a year on average.
"About 41% of homeowners say their property tax bill has been more expensive than they originally expected," Herhold explained. "Buyers tend to focus on the mortgage payment when they're shopping for a home and taxes get tucked into escrow as an afterthought. Then assessments go up and suddenly the monthly housing payment is a lot higher than what they signed up for."
5. Homeowners Insurance
The typical homeowner now pays $3,336 a year for insurance.
"Homeowners' insurance premiums have jumped sharply in recent years, especially in states dealing with severe weather, wildfire or hurricane risk," Herhold said. "Insurers are paying out more in claims and passing those costs along to homeowners. Our survey found that 62% of homeowners are stressed about rising insurance costs and 22% worry they could lose coverage entirely."
Bonus: HOA Fees
Homeowners in planned communities may also face a sixth major expense. Being part of a homeowners association means an additional $4,196 per year in fees on average.
While mortgage payments get most of the attention during the homebuying process, ongoing expenses often determine whether a home remains affordable long term. Buyers who budget for utilities, maintenance, taxes and insurance before closing may be better prepared for the true cost of ownership.
This article was provided by MoneyLion.com for informational purposes only and should not be construed as financial, legal or tax advice.
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