When you rent a property, you don’t generally pay many costs other than your rent itself. You might shoulder the electricity and water bills depending on the lease. But your landlord is responsible for all the ongoing costs of owning and maintaining the property.
Owning a home comes with a lot of hidden costs. It’s not as simple as paying a mortgage and being done with it. You have to take into account other expenses. Some are fixed expenses that occur regularly, while others might be unexpected emergency expenses.
Homeowners need to pay property taxes. In the US, property taxes are mandated by the local and state governments. They can vary widely. The tax’s total amount tends to be calculated through a percentage of the home’s total property value. If you have a mortgage, the lender will typically set up a way for you to pay your property taxes through their services.
If you have a mortgage, you’ll also need homeowner’s insurance. Even if you’ve paid for your home in full, this insurance is still a good investment. Homeowner’s insurance covers you in case your home is damaged or destroyed and loses its value.
For mortgage lenders, private mortgage insurance is a way to secure the finances of someone who can’t make a full down payment. The rule of thumb is that you’ll need this type of mortgage insurance if you pay less than 20 percent of the cost upfront.
Experts also highly recommend getting either a term life insurance or a mortgage protection insurance policy. These policies help your family members to retain ownership of your home if you die. Without one of these policies in place, your family may be at risk of being foreclosed upon, assuming they can’t make the mortgage payments.
Term life insurance tends to be a cheaper option than mortgage protection insurance, and it serves many of the same purposes.
Preventative maintenance will need to be done on the whole property, and it can be more costly than you think. Homes are made up of fixtures, finishes, equipment, appliances, and other structures that must be maintained.
According to experts, the average home requires anywhere from 30 to 40 maintenance tasks to be completed each year.