Hidden Costs of Homeownership

Hidden Costs of Homeownership

If you are renting a home, you might feel you are wasting your money and want a place to call your own. If you have saved a down payment, it’s easy to imagine you have your finances ready to buy a home. But are you fully aware of the other costs you will need to pay when you own a home?

Buying a home is an aspiration for most, but while the idea of home ownership is exciting, the cost isn’t a pleasant thing to think about. Buying the home is the biggest expense, but it is far from the only cost involved when you become a homeowner. 

The real expense of owning a house isn’t just your monthly mortgage payments. There are many hidden costs of home ownership that you will have to deal with as well.

When you own a house, there always seems to be another expense you have to deal with. But before you close on your first home, it can be all too easy to underestimate the real costs of homeownership.

We take a look at the unexpected expenses that come with homeownership:

Setting a Budget

When searching for a home, you need to set a budget and stick to it. But if you overspend, making monthly payments might become more of a struggle than you are comfortable with.

When looking at properties, it is easy to fall in love with a home. Even if your lender will allow you to purchase the home, it might not leave you with much to spare cash each month. As we will show, there are many hidden costs you will need to deal with that you might not have realized you need to budget for.

Property Taxes

When you own a house, you must pay the property taxes due for the location. The tax due is based on the home’s assessed value; on average, this costs homeowners 1.1% of the home’s value.

How much you will have to pay in taxes can vary considerably depending on the state your home is located. Some states, including New Jersey, Texas, and New Hampshire, charge nearly 2% in property taxes, though in many states this is well below 1%.

Usually, property taxes are added to mortgage payments and go into an escrow account to be paid annually. The money goes into escrow so that the lender can ensure that this payment isn’t missed. If these taxes aren’t paid, it could lead to a lien being placed on the property, which affects the lender.

Homeowners’ Association Fees

If your home is in a community managed by a homeowners’ association (HOA) or condo association, you may have to pay their fees. This fee might be due monthly or less frequently and pays for maintenance and other services in the community.

As well as the HOA fees that will increase over time, there could be other significant expenses. If the HOA decides some major work needs to be completed in the community, homeowners will have to pay the bill. This is known as a special assessment and could mean a considerable bill for each homeowner.

Insurance Costs

If you have a mortgage, the lender requires you to have a homeowners insurance policy before they will issue the loan. Typically, the annual payments for homeowners insurance are divided by twelve and added to the mortgage payments. Like property taxes, this money is added to an escrow account to pay the annual premium.

While you might expect homeowners insurance to cover everything, additional coverage may be required. It won’t cover acts of God, so if your home is located in areas more likely to suffer from natural disasters, additional coverage will have to be paid for.

If you do live in an area that is more at risk from flooding, hurricanes, or earthquakes, the additional cost of insurance coverage can be a nasty surprise.

Making the Home Your Own

When you buy a home, you will probably want to put your mark on it. Unless you are very lucky, your tastes won’t be the same as the sellers, so you will need a budget to make changes.

There might be minor cosmetic issues you want to fix to make your new home somewhere you can be proud to live. While you might be confident in completing minor changes and upgrades to the home yourself, there will still be a cost.

Home Maintenance Costs

If you have been renting a home, you can contact someone to deal with any maintenance issues you have. But when you are an owner, having to take care of any maintenance issues yourself could come as a shock. Any maintenance expense will be your responsibility, and you will have to organize the contractors yourself.

Let’s look at the main areas of your home that will require maintenance:

The Roof

If there are leaks in the roof of your home, a downpour could cause serious damage throughout the property. If the problem is bad enough, it could cause structural issues as well as damage your belongings and the interior.

If you know of damage to the roof or there are signs of water leaking, you will need to deal with it before it becomes a larger problem. Loose shingles, tiles, and facias need to be repaired, and some types of roofs need to be replaced every 20 years or less.


While smaller plumbing issues can be fixed relatively easily and at a low cost, your home could suffer more substantial problems. In older homes, there could still be lead pipes which could contaminate the water supply. Some homes might contain galvanized iron pipes that can become clogged and need to be replaced.

The Electrical System

If the electrical system in your home is old or damaged, it could cause a fire. Faulty wiring could create a short that could destroy your home. If the electrical system needs to be renewed the average cost can be substantial.

Heating and Air Conditioning

If the HVAC systems in your home haven’t been well maintained or if they are old, replacement could be another unwelcome expense.

The home inspection might indicate that you shouldn’t need to replace an air conditioner or furnace for at least a few years, but it might turn out you have a lot less time. When these things go wrong, repair might not be the best option either, with newer models being more efficient.

While homeowners are recommended to have their HVAC systems inspected every year, there’s no guarantee the seller did this. As the new owner, you could end up paying the cost for this lack of maintenance.

You might choose to pay for a service contract to have your systems maintained and inspected annually. This could offer lower-cost repairs and parts when things go wrong with your HVAC systems.


If your HVAC system isn’t well maintained, it could become contaminated with mold. And if that happens, it will spread mold around your home.

Mold can grow where there is dampness, so problems with your plumbing can also be the cause. Whatever the cause, if your home is contaminated with mold, it could create health problems. You should deal with any water leaks to avoid mold growing.

High humidity levels in your home can also allow mold to grow. Running a dehumidifier can prevent the humidity that causes mold to grow, which could cause allergic reactions or asthma attacks.


The idea of having pests in your home is an unpleasant thought, but it could also be doing serious damage to the property’s structure. Termites could be eating away at the structure of your home, doing significant damage.

Termites can enter your home through small cracks and are attracted to moisture, so you need to make sure the water doesn’t pool next to the foundations.

Though the home inspection might find evidence of termites, it isn’t guaranteed. To be sure you don’t have a termite infestation, hiring a pest inspector annually may be the best option.

Yard Work

If you don’t mind mowing the lawn and you already have the equipment to take care of your yard, this will keep down costs. But if you don’t have the time or the inclination, you will have to hire someone to care for your yard.

Paying someone to cut your lawn could cost you $100 a month, and then there will be other expenses that you will be billed for. Perhaps weed killer or fertilizer is recommended, and these are just some of the possible extra costs that will be added to your bill.

If you want to do this work yourself, you will need to buy some basic tools if you don’t already have them. You will need a lawnmower, rake, gloves, and many more items to keep your yard tidy.

If you live within an HOA area, they might require your yard to be regularly maintained. While you might be happy to let the grass grow, this could get you noticed by the HOA. Not maintaining your yard can also lead to blocked gutters and drains, which could allow water into your home.

The Exterior

The exterior of your home is exposed to the elements, and the effects of weather can add to your bills. Strong winds can cause damage to your home, that might not be covered by your insurance. The weather can cause wear and tear to your home as well, which you will need to deal with at some point.

Cracks can appear in the siding that you will need to repair. Your home might need to be repainted, decking restained, and repairs made to fences. Whatever the problem, there always seems to be something that needs to be fixed or renewed when you own a house.

The Interior

Inside your home, many things can go wrong or need replacement. From appliances breaking, to wear and tear through normal use of the home, you should have a budget to deal with these issues when they arise. 

You also need to maintain the interior by keeping it clean. If you are moving from an apartment to a house, you will probably have some cleaning supplies and a vacuum, but you will need to spend more.

A larger home also means more work and time to keep it clean. If you don’t have much free time, you might want to hire someone to help you stay on top of the cleaning. Hiring someone to clean could cost you $100 or more every time they visit.

An Emergency Fund

If a pipe suddenly starts to leak or faulty wiring cuts the power, you will need to hire someone to fix it right away. Putting aside a small amount of money to deal with these types of situations can prevent you from finding yourself in a difficult situation should the worst happen.

If you can save 1% or 2% of your mortgage balance for an emergency fund, surprise maintenance requirements will be more manageable.

Final Thoughts on the Hidden Expenses of Owning a Home

It is easy to get wrapped up in the excitement of buying your first home, and you might think you can comfortably cover the loan payments. However, there are many other expenses when you own a home that could mean your budget is tighter than you imagine.

If you use the full amount offered by your mortgage company to buy a house, there might not be much left at the end of each month for discretionary spending. Then if anything goes wrong that reduces your income, you could find yourself unable to afford your monthly expenses.

Hidden Costs of Homeownership

About the author: This article was written by Luke Skar of MadisonMortgageGuys.com. As the Social Media Strategist, his role is to provide original content for all of their social media profiles as well as generate new leads from his website.

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Filed under: Real Estate

Luke Skar

Luke Skar is the web developer and content strategist for MadisonMortgageGuys.com. Currently working for NRL Mortgage which serves 47 states including Wisconsin, Illinois, Minnesota, and Florida. Guided by his 20-plus years of various mortgage marketing experience, Luke provides top-quality SEO services, effective social media management, and web development and maintenance. Luke’s career in the mortgage industry began back in 2001, as a loan processor. After becoming a loan officer for a number of years, Luke now runs madisonmortgageguys.com. To ensure that all the information he posts is fresh, accurate, and up-to-date, Luke relies on the knowledge which his years of dedication to keeping up with the constant change that the mortgage industry provides.


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