Costs that homeowners pay that renters don’t
Homeownership is the eventual goal for many renters; paying a mortgage instead of paying rent each month helps to build equity and achieve long-term financial goals and growth. However, there are several costs associated with owning a home that renters do not have. The following are five costs that homeowners pay that renters do not.
- Property taxes
All homeowners must pay property taxes; these taxes are often used locally to fund schools, repair roads, and more. The average cost of property taxes in the United States is $2,110 per year [https://www.zillow.com/research/hidden-costs-of-homeownership-16072/]. Potential buyers should take this into account when looking at how much they can afford to pay each month for a mortgage.
- HOA fees
Homeowners Association fees can quickly make an affordable mortgage payment out of your budget. Apartment complexes, condos, and neighborhoods can all have HOA fees; while they help fund amenities such as landscaping, fitness centers, pools, and more, they are not included in the monthly mortgage costs.
- Homeowners insurance
While most renters carry renter’s insurance, the price difference between renters and homeowners insurance can be steep. Renters insurance is often a fixed cost, but the price of homeowners insurance depends on the appraised value of your home, its security features, square footage, and more. Homeowners should expect to pay around $35 for every $100,000 their home is worth in insurance costs; insurance costs can also go up if you need supplemental plans such as flood or earthquake insurance, which are not included in most standard plans.
When renting, most – if not all – of your utilities are included in the cost of rent. Homeowners, however, are responsible for all the utilities including water, gas, electric, trash, cable, and internet. The average homeowners pays $3000 per year in utilities; costs can fluctuate from month to month based on use.
- Maintenance and upkeep
Oftentimes the most difficult transition from renting to owning is maintenance; when the dishwasher breaks, the toilet clogs, or the trees get overgrown, there is no landlord to call to repair it. Homeowners can expect to spend around $3000 per year for regular maintenance costs; in addition, it is important to create a savings plan for major repairs such as replacing roofs, water heaters, or air conditioning units.