Hidden Costs of Homeownership

The hidden costs of homeownership: It’s not just the mortgage.

First House Stupid Tax

The first house we bought drove home this lesson. We stretched to buy a house at 13% interest. (Thank you, stagflation.) We prudently inspected it, including the furnace. But the very first weekend in the house, a cold day in November, the furnace gave up the ghost. A new heat exchanger for an old, old furnace made no sense as modern furnaces are much more efficient and less expensive to operate. There went another couple thousand dollars. We had to finance it as we had exhausted our savings for the down payment.

Yes, we had not yet learned the value of an emergency fund. Dave Ramsey was years into our future. So, we were still paying the stupid tax.

Come spring it was a lawnmower. And various home upgrades and repairs. Every repair required a new tool. Ka-ching! (For someone else’s cash register.)

Did I mention that the carpet was yellow-orange shag? Tres chic in 1972. Not so much fifteen years later. So new floor coverings.

It all adds up.

Budget for the Hidden Costs of Homeownership

Turns out we’re not unique. According to Zillow, the average homeowner should plan on at least $9,000 a year to cover the hidden costs of homeownership.

This Zillow tip matches our experience.

The household budget must include the predictable monthlies of a mortgage, homeowners’ insurance (typically included in the mortgage payment), and utilities. But it also needs to include a budget for home improvements and maintenance. You don’t have to buy a new roof or bathroom remodel every year, but you must plan for when these expenses will be necessary. Set aside money in sinking funds.

Zillow Tip

Zillow gives you a starting point to estimate these hidden expenses of maintaining the house. As a reality check, $9,000 a year is $750 a month. That’s $750 above and beyond the mortgage payment. Now, $9,000 is an average. Depending upon the condition and price of your home, your “mileage” may vary, but be realistic. All those trips to Ace, Home Depot, Lowes, or Menards add up. Buying a home is a little like riding the back of a tiger, you have to feed the tiger or it eats you.

Hidden Costs of Homeownership

A recent remodeling project with the constant help of Gunner the Brittney. ‘Our contractor’, Jeremy, has become a part of our extended family.

Keep up with maintenance to maximize value

If you’re buying a house with the thought of creating an appreciating asset, remember that value is closely tied to the condition. A poorly maintained asset can become a liability because buyers factor in the costs of deferred maintenance (maintenance that should have been done). To get the full value of the investment requires keeping up with maintenance.

Always a Reason

Are you a DIY wannabe? Then learn this lesson. If it’s been covered up, there’s always a reason. Most remodeling or home improvement projects end up involving more and costing more than originally estimated. A fixer-upper’s favorite word? “Surprise!”

Sixth House Wisdom

We’re currently redoing a small bedroom into a home office. The room received new windows, insulation, and a vaulted ceiling two years ago. When we opened up the wall, we discovered there was no header over the windows and the wall studs were all wrong for an exterior weight bearing wall. We thought it was a going to be a simple window upgrade. Nope. Had to rebuild the entire front second floor west wall with proper framing and headers. Now you know why we waited a couple of years to do drywall and finish trim. Every project has surprises. We still get surprised. And this is our sixth house. You need both a budget and an emergency fund. There’s a reason why the term, “Money Pit” hits home with so many homeowners.

We enjoy home improvement projects, both inside and outside. It’s part of the fun of homeownership. Love the planning. Enjoy the execution. But it’s not free. Plan and keep up with the required maintenance. It costs more if you fall behind. Little problems balloon into expensive repairs. Don’t pay the stupid tax with no money for the hidden costs of homeownership.


Add yours →

  1. Good article. I think budgeting for the hidden costs is a huge one. It’s so easy to get blindsided but unexpected expenses. I love home ownership but sometimes it would be nice to just be able to call the landlord to fix things! 🙂
    Patrick recently posted…How To Soundproof A Home OfficeMy Profile

    • As we’re in the middle of a home office build, your “How to Soundproof” article is timely. We’re doing the solid-core door upgrade and double pane windows. May have to consider acoustical absorption materials with the vaulted ceiling. We’ll see after move-in how it sounds. We do videoconferencing and podcasting/videocasting so good sound matters. Thanks for the feedback!

  2. When you own your own home, you get to decide which kind of appliances you use in your home. You don’t have to be at the mercy of the landlord or property manager to make energy efficient changes that can save you hundreds of dollars every year and potentially thousands of dollars in the long run.
    Burpengary East house & land packages recently posted…North Harbour’s Display Village Showcases 33 Homes from Australia’s Best Home BuildersMy Profile

    • Yes, an excellent point! As the homeowner, you personally can benefit from the long-term impact of your “good” decisions. Also an important point to consider also when buying. Look for those long-term costs. They add up and you’ll be the one paying the costs – even when renting. We touched on the need to look at the decisions made by others before buying in an earlier article on Sustainability in Senior Housing. See: https://agingwithfreedom.com/2017/08/15/sustainability-in-senior-living/

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