Utilities - Your Payment Beyond Principal Interest Taxes and Insurance

Nobody wants to be house poor.  Therefore, understanding what your mortgage payment will be when buying a house is only part of what should be considered when contemplating one’s housing costs.  Getting quotes on phone service, security systems, internet and cable are easy enough but utilities like heating and cooling costs can be a little trickier.   Taking these costs into consideration is important though because miscalculation can lead to unexpected payment shock.  Should that payment shock occur, it’s often too late to do much about it so it’s necessary to be proactive.

Some of the required seller disclosure items are quite silly considering that utility expenses are not one of them.  In the days of yore, in a lot of jurisdictions, one used to be able to contact the local utility and request the information for average monthly heating/cooling expenditures.  Now, for privacy reasons, that information needs to be requested from the seller.  And it should be.  It’s wise to ensure that this information is obtained prior to the expiration of the inspection contingency to ensure you have all necessary information for a complete decision making process.

After getting this information from the seller, a homebuyer can take the information from the inspection and identify potential savings.  Here are some relatively inexpensive but high impact energy efficient upgrades to consider:

• Add a hot water heater blanket – saves up to 9% in water heating costs
• Install water-efficient showerheads - the average family could save 2,900 gallons per year by installing WaterSense labeled showerheads
• Using modern or additional attic insulation
• Use weatherstripping
• Upgrade to a smart thermostat – can save up to 20%
• Use Energy Star® appliances – this definitely includes the furnace
• Use Low-flush or low-flow toilets - the EPA estimates that the average US home will save $90 per year, and $2,000 over the lifetime of the toilets
• Use high efficiency front load washers – can save up to 50% on water and electricity
• Replace incandescent with LED or CFL  bulbs – CFL bulbs are around 75% more efficient

Using the information from the seller on current utility expenditures to establish a baseline and comparing what energy efficiencies could be incorporated that aren’t currently being used (as would be revealed in the home inspection) can give a homebuyer the necessary, balanced idea of what to anticipate for utility costs.  This, combined with the mortgage payment, taxes, insurance, water, cable, internet, waste removal, home security and home phone service are the true costs of homeownership.  Failure to take them into consideration can turn an anticipated cash flow into a fantasy and leave a happy new homeowner with a financial hangover.