26 Hidden Costs of Home Ownership

LOS ANGELES - Sept. 17, 2024 - PRLog -- It's always been the case that as thorough as home buyers think they are in itemizing future expenses, costs they didn't account for eventually present themselves.

In some cases, there's confusion with the monthly mortgage payments and the fact that the bill is so high when the mortgage loan itself is much less.

Since the COVID pandemic, which brought with it supply-chain issues and high inflation, the costs for fixes have also increased, therefore the cost of home ownership has increased overall.

To cut through all the confusion around which costs you should expect when you buy a home, here is a comprehensive list of expenses, including those rolled into escrow and those which are not. Here are 26 hidden costs

1. Property Taxes

Property taxes are based on the assessed value of your home and vary greatly by location. These taxes often increase over time as property values rise. Average annual property taxes vary greatly

To estimate your property taxes each year, find out what the property tax rate is in your county and follow this formula: Annual property tax = Property value * (Property tax rate %/100).

Property taxes are often rolled into escrow. It's important to contact your lender if you become aware of upcoming increases in your taxes so that you are paying the right amount in mortgage payments each month. Otherwise, you'll have to pay at the end of the year.

2. Homeowners Insurance

Homeowner insurance is usually required when someone takes out a mortgage. The home technically belongs to that lender, and they will want to know that their asset is protected against damages.

If you do not buy a homeowners insurance policy, a lender may add a force-placed home insurance policy on your home and roll it into escrow. Their choice for homeowners insurance coverage is usually more expensive than comparing rates on your own to find the right policy.

Homeowners insurance also varies greatly by location. Other factors include the size of the home, the home's age, the deductible amount chosen, your credit score (if allowed in your state), how many claims you've filed in the past, in what condition the roof is in, and risk factors

Your coverage limit needs to be based on the rebuilding cost of the home, not the market value.

Certain breeds of pets may increase your home insurance rate, because injuries covered by pets are covered by home insurance...

For the full article, visit https://smartfinancial.com/hidden-costs-homeownership