[Article] The true cost of owning a home

Victor

http://realestate.msn.com/buying/Article_kip.aspx?cp-documentid=4980274&gt1=10130

The true cost of owning a home
Your mortgage payments are only a fraction of what you'll pay out after you become a homeowner. The total? For this writer, $43,555 in four years, not counting house payments.
By Cameron Huddleston, Kiplinger.com

If you're entertaining thoughts of buying your first home now that the housing market is cooling off and prices are coming down, take note: The cost of home ownership might be a lot more than you think.

I'm not talking about the down payment or monthly mortgage payments. Although buying a home is a big investment, owning one comes with a new set of expenses you may not have had while renting or living with Mom and Dad. These extras can put a strain on your daily finances if you aren't prepared.

I know the temptation to buy a house can be strong, especially if you've been renting for a while, have gotten married or are ready to start a family. When my husband, Alex, and I moved to Kentucky four years ago from Washington, D.C., where we rented an apartment for six years, I couldn't wait to buy a house. Since then, we have sold our first home, bought our dream home (well, at least it will be after we do a lot of work on it) and learned plenty about how much it really costs to be homeowners.

So to help you estimate your own cost of ownership and come up with a realistic housing budget, I offer my experience as an example. Below, I itemize the expenses Alex and I have paid over the past four years, complete with dollar amounts. Your own costs will vary depending on the size, condition and location of the house, but this should help you anticipate what you're getting into. Homeownership comes with a bevy of benefits, but you'll want to make sure it's the right move for you at this point in your life before making that long-term commitment.

Our annual insurance premium nearly doubled when we moved into our dream home -- not bad considering we'd gone from a modern, 2,600-square-foot home to a 100-year-old house with 6,000 square feet. It pays to shop around for the lowest premium. If we had chosen the first insurer we called, we would have paid $1,000 more for annual coverage. Alex and I ended up going with the same company that insures our vehicles because it gave us a $250 annual multipolicy discount, and its rates were a lot lower than other companies. Total: $825 a year in our starter home; $1,583 a year in our dream home.

Property taxes. This is another expense you can't escape. Property taxes are based on the value of your home. So the more expensive your house, the more you'll have to pay in taxes. You'll have to pay state property taxes and usually county or city property taxes, too. Total: $1,532 a year in our starter home; $4,307 a year in our dream home.

Utilities. You're probably used to budgeting for utilities if you are renting. But the cost of heating a one-bedroom apartment can pale in comparison with the bills for an entire house. Total: $2,045 a year in our starter home; $4,800 a year in our dream home.

Appliances. When you buy a house, most major appliances will come with it, except perhaps the washer and dryer. We spent about $800 buying these two appliances when we bought our first house. The sellers also took their refrigerator, so that was an additional $750 (for a pretty basic model). Total:$1,550.

Furniture. If you move from a one-bedroom apartment to, say, a three-bedroom house, you probably won't have the furniture to fill it. When we bought our first house, we bought a king-size bed, a bedroom set, a dining-room set and a kitchen table and chairs. For our current house, we had more space to fill, so we bought another casual-dining set, a sofa and an area rug. Total: $4,550.

Repair and maintenance. If you've been renting, your landlord probably has picked up the tab for repairs and general maintenance of your abode. Once you have your own house, you'll foot the bill. And if you're not handy, it can get expensive if you have to call in a pro to paint the interior or exterior of your house, clean or repair gutters, or fix plumbing or wiring. I'm getting ready to shell out $615 to have our gutters cleaned and repaired. In our starter home, we spent at least $200 on paint for the rooms and kitchen cabinets that we painted ourselves. Then we paid $650 to a professional to paint a large room with a vaulted ceiling. We also paid $500 to have someone replace drywall with slight water damage and $150 to have the flashing replaced around the chimney (the source of the water damage). We paid about $100 to have our asphalt driveway sealed. My husband was handy enough to chop down a small tree that had split in half during a storm, but we paid about $150 to have another trimmed so it wouldn't meet the same fate. Plus, we spent at least $150 buying hand tools (such as hammers and screwdrivers), nails, screws and a drill. Total:$2,515.

Yard care. If you are used to living in an apartment with no yard, this can be the biggest expense shocker. At the least, you'll have to buy a mower to keep the grass trimmed. But you probably will have to invest in many more lawn and garden tools. We got lucky because we "inherited" several lawn tools from my uncle when he moved from a house to an apartment and a push mower from a neighbor when he bought a new one. Despite the freebies, we've spent plenty buying a trimmer ($70), an extension chainsaw ($100) and an electric blower ($60), and then a gas-powered blower ($130) after my husband complained the electric blower was too cumbersome. We rented a pressure washer for $64 for the weekend to get layers of gunk off our patio, front steps, deck and fence. We also bought lawn furniture ($600) and have spent $900 on landscaping. Total:$1,924.

Pest control. This is one expense you may not have to deal with, but we've had to at both our homes. Before you buy a house, be sure to get a termite inspection. Unfortunately, even if there is no infestation at the time of the inspection, that's no guarantee these creepy-crawlies won't show up and do a lot of damage if you don't wipe them out quickly. Our first home was termite-free when we bought it, but these pests showed up the next year. We spent about $1,200 having a bait system installed to eradicate them and paid $75 each quarter for monitoring of the system. A few months ago, we discovered termites in the rental cottage behind our new house and have decided to get not only that property treated but our main house, too. Total: $1,800 in our starter home, $2,370 in our dream home.

Remodeling. The home-remodeling TV shows make it look so easy (and often fail to mention the cost.) So some of us buy homes with fixes we'd like to make -- an upgraded kitchen, perhaps -- without being honest with ourselves about how much it's going to cost. Our first home had lots of carpet, and I wanted hardwood floors. So we had them installed in two rooms for about $4,000. In our current house, we've spent $1,000 to have a wall added. But we have several major projects we plan to tackle over the years. Total: $5,000.

The grand total

Add this all up and -- brace yourself -- we've spent $43,555 over four years. That breaks down to an average of about $10,900 a year for Alex and me to be homeowners, and that doesn't include mortgage payments. The regular costs such as taxes, insurance and utilities are fairly easy to anticipate, depending on the home's size and location. It's your home's start-up costs and life's little surprises that you need to watch out for. Before you buy, you should draw up a mock budget for yourself to see if you really can afford the financial commitment.


Once you buy, a good way to make sure you have the cash when you need it is to set aside a fixed amount of money in your monthly budget for home expenses. Park the money in a high-yield online savings account specifically for that purpose. That way, you won't have to lean on your credit cards or raid your long-term savings when your home needs a repair or something else arises.

I'll admit, once I sat down and added up my own personal costs, I was blown away. But remember, your costs will vary. Our expenses were quite different between our starter home and our dream home, for example. But the bottom line is, despite the high cost of owning a home, I wouldn't give mine up to move back into an apartment. I just wish someone would have told me before I bought my home how expensive it was going to be.

wasim21k

i m 100% not agree with this its b*&^&**&t :mad: thats all i can say.
i'll be moving in my new house 3 bed from 1 bed flat and i can give you list what i spent.

Borzoi

Victor wrote:

not bad considering we'd gone from a modern, 2,600-square-foot home to a 100-year-old house with 6,000 square feet

6000 Sq Ft !!!

Bigger than most city centre 4 story Georgian houses

Bigger than the block of 6 2-bed apartments that I used to live in.

It's a bloody big house:eek:

connundrum

wasim21k wrote:

i m 100% not agree with this its b*&^&**&t :mad: thats all i can say.
i'll be moving in my new house 3 bed from 1 bed flat and i can give you list what i spent.

Do.

I rent a three bed house and can tell you that in the last year between the landlord and myself, we have spent the guts of €3000. Between bills, remodelling, new garden equipment, replacing windows, servicing boilers etc etc it all adds up. I could well believe that $10,000 a year for the 1st 4 years could be spent, especially if you want to make it into your dream home.

Andrew Duffy

wasim21k wrote:

i m 100% not agree with this its b*&^&**&t :mad: thats all i can say.
i'll be moving in my new house 3 bed from 1 bed flat and i can give you list what i spent.

- Your 3 bedroom house is unlikely to be 6,000 square feet.
- About a third of the four-year spend was property tax, which does not exist here.
- Why so angry?

Zambia

Hmm I think its all relative ..This lady appears to have been very picky about what sg=he wanted and unfortunate re problems with water an termites...

I owned a decent 5 -10 yr old 3 bed semi for 4 years and probaly spent €1000 including bin tags TV licence and other running costs. although this does not include gas and Electrity. Plus she brought a 100 year old house , running costs are to be expected TBH.

But always a goos list of thing to keep in mind Good post