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What are the hidden costs of homeownership?

By
Real Estate Agent with Realty ONE Group Advocates 484-237-2055 PA License - AB067198

Buying a home is a great step to building wealth. Homeowners build wealth much more quickly, a recent report, November 2024 from the Aspen Institute's Financial Security Program said it was huge. A renters median net worth was $10,000, a homeowner's is $400,000.

But, when buying a home there are some hidden costs of ownership to take into account so you are prepared.

1) Buying a home with a home owners or condo association will have a monthly fee towards maintenance costs and often these have an equity requirement of an up front fee, sometimes as much as six times the monthly cost paid at closing. Some also have move in fees as well.

2) Maintenance, even if you are within a development with a home owners association there will be ongoing maintenance that many renters neglect to think about being used to calling the landlord to fix anything that breaks. Usually, you want to budget something like 5% of the cost of the mortgage towards building an emergency fund to use for maintenance emergencies. One way to offset these is to take out a home warranty, like insurance this does not remove the total cost of repairs, but will lower the cost. It is basically a form of insurance where you pay a deductible rather than the cost of fixing the appliance. Some home warranty companies are better than others. Often these companies will fix an item multiple times before replacing it, even though it might be better to replace at once. Also, generally you do not get to choose the people who work on your appliances, they are chosen by the home warranty company.

The benefit of a home inspection when buying a home is to not just find out what might be broken, but to develop a maintenance plan, so you have an idea of what is going to need replacing and when and can budget for those items ahead of time.

3) General Repairs are something that always seem to happen at the worst time, on a holiday or when funds are low. This is another reason for developing an emergency fund for home repairs when they arise.

4) Utility costs may also be something you are not used to paying if a landlord has included them in the rent. But these include, cable, internet service, electricity, natural or propane gas, heating oil, water and sewer costs. These can be monthly or quarterly costs depending on the service.

5) Insurance costs are much higher when you own a home over renting a home where you are simply covering your own things and not the property itself. However, insuring a home and a car together can save you money as I am sure you have seen the adverts where bundling can save you money. It is always worth getting a yearly estimate from other insurers as prices can fluctuate and you may be able to save a significant sum over your current policy cost.

Whilst, these costs may seem large, the benefits of wealth building over time far outweigh the costs as the report cited at the start of the article makes clear.

So, if you are interested in looking for a home along the Main Line or in Chester County contact Nick Vandekar, Realty One Group Advocates, Selling the Main Line and Chester County, office 484-237-2055, cell or text 610-203-4543, or email Nick@VandekarTeam.com to arrange an appointment to discuss your needs and how I can help you find the right home and give you the confidence to make the right decisions throughout the transaction.

Posted by

Nick Vandekar
Nick is a Tredyffrin Easttown Residential and Commercial REALTOR selling The Main Line, Chester, Delaware and Montgomery Counties.

Giving you the confidence to make
the right decisions.

225 W Uwchlan Ave
Downingtown , PA 19335
Office 484-237-2055
SellingTheMainLine.com
Mobile: (610) 203-4543 [call or text me]
Email Me

 

My Blog

   

If you are buying or selling on or around
Tredyffrin Easttown or along the Main Line, 
I can help you, contact me.

Comments(18)

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Michael Jacobs
Pasadena, CA
Pasadena And Southern California 818.516.4393

Hello Nick - just as buying a home is much more than having an offer accepted, there are many sorts of components involved in home ownership.  While these day-to-day costs are not exactly hidden, they can remain in the background for those who are too excited to acknowledge their existence.  Understanding the reality of realty is helpful.  And, of course, necessary to be successful.   

Dec 17, 2024 08:08 AM
Roy Kelley
Retired - Gaithersburg, MD

This is good information to share with prospective home buyers.

Have a great day and a productive week.

Dec 17, 2024 08:16 AM
Lew Corcoran
Better Living Real Estate, LLC - East Bridgewater, MA
Expert guidance. Exceptional results.

Thank you, Nick Vandekar, 610-203-4543, for sharing this informative piece! Your insights on the hidden costs of homeownership are invaluable, especially for new homeowners looking to navigate financial responsibilities effectively.

Dec 17, 2024 08:19 AM
Dorie Dillard Austin TX
Coldwell Banker Realty ~ 512.750.6899 - Austin, TX
NW Austin ~ Canyon Creek and Spicewood/Balcones

Good morning Nick,

Your post points out the reality of costs of home ownership. Besides the faster path to building wealth there is a sense of pride of securing the American Dream of owning your own home and making it your own. Great post!

Dec 17, 2024 08:24 AM
Jeff Masich-Scottsdale AZ Associate Broker,MBA,GRI
HomeSmart Real Estate - Scottsdale, AZ
Arizona Homes and Land Group/ Buy or Sell

These are SO TRUE Nick. Also, what are the actual heating and cooling costs of the home if you are moving from a mild climate. Jeff

Dec 17, 2024 08:44 AM
Nick Vandekar, 610-203-4543
Realty ONE Group Advocates 484-237-2055 - Downingtown, PA
Selling the Main Line & Chester County

Michael Jacobs knowing the reality of realty is important and allows people to make the right decision for them.

Roy Kelley education and understanding the real costs is always important for buyers.

Lew Corcoran knowing those real costs allows buyers to make the best decisions for themselves without a sudden shock of discovering costs they had not anticipated.

Dorie Dillard Austin TX having your own place and not having to ask a landlord for permission to paint or hang a mirror makes all the difference. But building wealth over time as the link showed is important.

Jeff Masich-Scottsdale AZ Associate Broker,MBA,GRI that is a good point, utility costs can be very different depending where you live.

Dec 17, 2024 09:08 AM
Jeff Dowler, CRS
eXp Realty of California, Inc. - Carlsbad, CA
The Southern California Relocation Dude

Hi Nick:

This is excellent education on the potential costs of owning a home that buyers don't always think about or plan for, especially those buying their first home. Renting is a whole different ball game!

Jeff

Dec 17, 2024 10:12 AM
Joe Mojica
Laer Realty Partners Bowen - Port St Lucie, FL
Your Home Adds Value to You

Nick, thanks for the information you posted. It is excellent information to share with both buyers and sellers.  Have a great day.

Dec 17, 2024 10:15 AM
Nick Vandekar, 610-203-4543
Realty ONE Group Advocates 484-237-2055 - Downingtown, PA
Selling the Main Line & Chester County

Jeff Dowler, CRS that is very true, renters are accustomed to calling the landlord whenever anything goes wrong or breaks.

Joe Mojica thanks for stopping by and commenting.

Dec 17, 2024 10:48 AM
Nina Hollander, Broker
Coldwell Banker Realty - Charlotte, NC
Your Greater Charlotte Real Estate Broker

Hi Nick... so many first-time buyers forget about these "hidden" costs, especially those associated with maintenance and repairs. I'm always advising "new" homeowners to set up a savings account for those just in case.

Dec 17, 2024 10:51 AM
Liz and Bill Spear
Transaction Alliance 513.520.5305 www.WarrenCountyOhioRealEstate.com - Mason, OH
Transaction Alliance Cincinnati & Dayton suburbs

Nick, no doubt homeownership comes with its share of surprises.  We didn't plan to pay for half a roof reshingle out of pocket when the tree service accidentally dropped a tree on our home during removal of a dead tree, but the settlement claim only covered half.  And of course we've had appliance repairs and some plumbing work done, and a lot of mulch for our landscaping.  But it's OUR place!

Dec 17, 2024 10:52 AM
Nick Vandekar, 610-203-4543
Realty ONE Group Advocates 484-237-2055 - Downingtown, PA
Selling the Main Line & Chester County

Nina Hollander, Broker that is always a good idea.

 

Liz and Bill Spear trees can be a big risk that many homeowners overlook.

Dec 17, 2024 11:01 AM
Joan Cox
House to Home, Inc. - Denver Real Estate - 720-231-6373 - Denver, CO
Denver Real Estate - Selling One Home at a Time

Nick, such a good post, as some buyers don't factor in that the water heater could go out, or an appliance.

Dec 17, 2024 03:58 PM
Endre Barath, Jr.
Berkshire Hathaway HomeServices California Properties - Beverly Hills, CA
Realtor - Los Angeles Home Sales 310.486.1002

Nick Vandekar, 610-203-4543  sadly many first time home buyers are not aware and get shocked when all the other costs keep propping up, great advice, Endre

Dec 17, 2024 09:52 PM
Richard Weeks
Dallas, TX
REALTOR®, Broker
Great information, thanks for sharing.  I hope you have a great day.
Dec 18, 2024 03:16 AM
Carol Williams
Although I'm retired, I love sharing my knowledge and learning from other real estate industry professionals. - Wenatchee, WA
Retired Agent / Broker / Prop. Mgr, Wenatchee, WA

Hi Nick,
Homeownership is a long-term investment in financial planning. There are definitely additional costs to owning a home vs renting, but the tax advantages and equity growth are well worth it in the long-term.

Dec 18, 2024 05:24 AM
Brian England
Ambrose Realty Management LLC - Gilbert, AZ
MBA, GRI, REALTOR® Real Estate in East Valley AZ

Even though there are a lot of costs associated with being a homeowner, the benefits far outweigh the costs, haha.

Dec 18, 2024 06:35 AM
Nick Vandekar, 610-203-4543
Realty ONE Group Advocates 484-237-2055 - Downingtown, PA
Selling the Main Line & Chester County

Joan Cox none of us has a crystal ball unfortunately, so all we can do is budget for the worst and hope for the best.

Endre Barath, Jr. thank you, the point is to make sure people have all the information they need to make the best decision for them.

Richard Weeks thanks for stopping by.

Carol Williams as the report showed, owning a home allows for much greater net worth to be built up. Yes, it does take time, but renting is just throwing money away.

Brian England as long as you know those costs you can budget and take advantage of the benefits of homeownership.

Dec 18, 2024 06:46 AM