Home Groan: Hidden Expenses Plague Home Buying

The American dream of buying a home could turn into a nightmare if you don’t think through the entire process and what awaits you as a homeowner.

That isn’t to suggest that owing a home is somehow a bad idea, but rather that you’ve been told year after year that buying is better than renting and now find yourself house hunting when you aren’t sure this is the best move for your financially.

The truth is you should try to buy, build equity and your credit and have something that is your own but that doesn’t mean buying a home is best for everyone involved.

Even if you feel as though the asking price and what you buy a house for seems fine, you also have to consider the ancillary expenses that often are overlooked when you’re filled with excitement and joy of the purchase and yet angst and concern set in when you realize that owning a house is more than just paying a mortgage each month.

For example, that mortgage payment always sounds good but what about taxes involved that are rolled into the mortgage payment or have to be paid yearly after the fact. Are you able to account for a few thousand dollars or more every 12 months? If your house payment and other bills are just able to be paid by you, then taxes could be the tipping point that causes financial burden that you aren’t prepared to handle.

Most home loans also include PMI, private mortgage insurance, and that’s another expense. If you do an FHA loan, you don’t have to put as much down, but PMI is a must for the duration of the entire loan, and that could mean you’re paying thousands more than the cost of the price alone.

Beyond the costly items that you pay for that are part of that mortgage payment, what about the utility costs, too? You maybe got a little spoiled with rent that includes utilities and didn’t consider the over and above cost utilities have on your budget or spending. For instance, if you paid $650 in rent and that included gas, garbage, sewage, you do not have to pay those on a monthly or every three-month basis. A mortgage payment might only be $850 a month, for instance, but now the gas bill has to be factored in, along with the other two, plus electric costs likely will be higher in a home than in a smaller apartment or townhouse. That $200 difference in that scenario between rent versus mortgage doesn’t remind buyers that other costs are inevitable.

Buying is perfectly fine and should be an end goal for property and living space, but only if you’ve truly considered everything else involved.