5 Unexpected Costs of Owning a Home

Hoping that handing over your life savings on a down payment was the only expensive part of buying a home? In reality, there are some additional costs that may catch you unaware. If you follow along with these tips, you won't feel as though you’ve been bamboozled after you’ve signed your name on the dotted line.

These are 5 unexpected costs of owning a home that you should be on the lookout for:

1. Closing Costs

Closing costs are fees paid at the closing of a real estate transaction. The range of fees will be decided during the negotiations of the property. Many people pay between 2-5% of the cost of the home in closing costs. While the fees change depending on where you live and many other factors, you should be prepared that this is a real cost you could be responsible for. Most commonly, you will have to come to the closing table with a check (or have paid closing costs in advance).

Fees could include:

• Mortgage taxes

• Attorney fees

• Title insurance

• Lender application fees

• Recording fees

• Real estate tax reimbursements

2. Property Taxes

Property taxes can vary significantly depending on the location of the home. Calculating your new property tax with your mortgage during the home search and before buying, can give you a better preview of what your monthly expenses will look like.

2021 Cape Cod Property Tax Rates:

• Barnstable: $8.64

• Bourne: $10.09

• Brewster: $7.85

• Chatham: $4.62

• Dennis: $5.60

• Eastham: $8.58

• Falmouth: $8.05

• Harwich: $8.11

• Mashpee: $8.03

• Orleans: $7.20

• Provincetown: $6.66

• Sandwich: $13.16

• Truro: $7.73

• Wellfleet: $7.78

• Yarmouth: $9.18

According to MA Tax Rates

3. Homeowners Insurance

Every home with a mortgage requires homeowners insurance to cover natural disasters and catastrophic events such as storms, fires, or floods. The insurance will cover the cost of repairs for damage and replacing lost items, so it is important to find good coverage that works for you. While the rates are fairly set and not subject to negotiation, you’ll also want to be aware of some above and beyond costs, you could pay. For example:

• Are you in a flood zone?

• If you’re buying a condo, do you need a liability rider for accidents that happen on the property?

Discuss all aspects and responsibilities with your insurance broker to be sure you are fully covered. Then, add this to your budget. Don’t have an insurance broker? Our team has a network of excellent local vendors to help with ALL aspects of the home buying process. Reach out and we can make an introduction!

4. Utilities

Utilities are an addition to your monthly budget that can vary seasonally and on the location of the home. There are a number of different utilities that are required to run your home such as water and power, which are serviced through your local providers. Other accessories such as HOA Fees can range greatly in the monthly price but could cover the costs of maintaining common areas, such as lobbies, patios, landscaping, swimming pools, tennis courts, a community clubhouse, garbage disposal, and even the exterior maintenance of your home. In today's technology-driven world there are energy-efficient tools homeowners can use to be proactive with potentially lowering their monthly expenses. For instance, it may be worth investing in solar panels or smart energy-saving outlet devices. These are many factors in a home that could affect your monthly expenses, including but not limited to:

• Age and quality of your HVAC system

• Insulation and Windows

• Water Pressure and Water Heater

• Age of Home

• Age Appliances

Do some research in addition to what you learn on a home inspection and find out what average utilities run for the home you want to buy. Depending on how tight your budget is, this may be a make-or-break factor in your decision.

5. Home Maintenance

There are both predictable and unexpected home maintenance costs that you must be ready for. Even with a passing inspection, things in your home will inevitably break down and some can be very costly. For instance, if your HVAC system or appliances have aged out of manufacturer warranty, it’s on you to pay the full cost of repairing or replacing them if they break down. Other regular house maintenance items that can uphold the integrity and value of your home are:

• Replacing air conditioning filters

• Maintaining exterior paint

• Cleaning storm gutters

Numerous housing studies indicate that you will probably pay between 1-2% of your home value each year to maintain your home. Have you factored this into your budgeting?

Still not sure what you can *really* afford in today’s wild real estate market? Nichole Willey & Team is here to answer your questions and set you up for success, long after we’ve handed you the keys to your home. About to embark on your very own home search? Be sure to check out our guide to Important Questions to Ask When Buying a Home, and then remember to contact us to get the ball rolling!