I own a 3-bedroom, 2-bath house in South Daytona, Florida. Here's exactly what it costs every month.
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- Principal and interest payments are often only a small part of what it actually costs to own a home.
- To get a good idea of what your home really costs, taxes, insurance, utilities, landscaping, and repairs all need to be taken into account.
- Buying a home can be a great decision, but you'll want to make sure that you have realistic expectations of the financial obligations that will come with it.
Buying a home is a unique shopping experience. While it may be no problem keeping feelings out of the equation when shopping for groceries or insurance, buying a home can lead to strong emotions.
Because of this, it's easy to fall in love with a home before you even hear the asking price. It's also easy to plug numbers into any online mortgage calculator and convince yourself that the monthly payment would be manageable.
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Unfortunately, mortgage calculators can be incredibly misleading. They often don't take into account insurance, taxes, utilities, HOA fees, and the other "hidden" costs of home ownership.
With that in mind, I decided to take an inventory of all the expenses that are related to my home. The area where you live and the size of your home will obviously cause your costs to be different than mine. But this will at least give you an idea of the kinds of expenses that you may deal with as a homeowner.
What it costs to own my home
My wife and I live in South Daytona, Florida with our preschooler and toddler. We bought our home about five years ago for $90,000. It's a 3-bedroom, 2-bath home with 1,361 square feet of living space. Our home has a one-car garage and a nice-sized half-acre yard.
To get the full picture of what it really costs to own my home, I needed to consider three different types of expenses: monthly fixed costs, monthly variable costs, and quarterly or annual costs.
- Our home's monthly fixed costs include the principal and interest on our home loan and taxes and insurance which are also included in our monthly mortgage bill
- Our variable monthly costs include our electricity and utilities
- Our quarterly or annual expenses include our quarterly pest control bill, annual termite bond renewal, and annual HVAC and riding-mower tune-ups
To find the monthly cost of owning my home, I began by averaging out all our variable expenses. For instance, to find our "average" electric bill, I added the 12 bills together and then divided by 12 to find that our average bill is $145.
And for quarterly or annual expenses I just divided them by four or 12. After punching a few numbers into the calculator, I had found what it costs to own my home on a monthly basis.
- Principal and interest: $425/month
- Taxes: $70/month
- Insurance: $139/month
- Utilities: $75/month
- Electric: $145/month
- Pest Control: $13/month
- Termite Bond Annual Renewal: $8/month
- Annual AC Check-up: $13/month
- Riding Mower Annual Tuneup: $13/month
- Total Monthly Cost: $901
Do you see now why mortgage calculators simply don't show the full story of how much it costs to own a home? My "other" expenses are more than double what I pay each month towards principal and interest.
And keep in mind that we don't have any HOA fees in our neighborhood and we don't pay for landscaping - two very common homeowner expenses.
The 'hidden costs' of home ownership
All the expenses listed above are ones that occur on a consistent basis. But even that list doesn't shed a true light on how much it costs to own my home.
When we first moved into our home, there were all sorts of things that had to be done.
We had to put on a new roof which cost us over $6,000. We also refurbished the wood floors, remodeled the kitchen, painted the interior and exterior, and purchased appliances. These are all things that you don't have to worry about when you rent.
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Another thing that you don't usually have to worry about when you rent? Landscaping. I mentioned earlier that we don't pay for a lawn service, which saves me a lot of money each month. But in order to make that possible, I had to buy over $1,500 worth of lawn equipment.
Finally, these numbers don't take into account the repairs that pop up without warning throughout the year. A few months ago our hot water heater gave up the ghost. And just last weekend, our garage door went kaput. Again, these are the types of things that the typical tenant doesn't need to worry about.
Despite the costs, I still love being a homeowner
After reading everything I said above, you may think that I hate being a homeowner. Nothing could be further from the truth. I love our home and I wouldn't go back to renting for the world.
But we also went into our home purchase with our eyes wide open. We fully expected that our home would cost more than our mortgage payment and we were prepared for that.
Before we even started looking at houses, we saved up a healthy emergency fund so that we could weather the storms (sometimes literally - remember, we live in Florida) of homeownership. And we made sure to buy a home that was 20% below what the lender told us we "qualified" for.
We wanted to make sure that we owned our home instead of our home owning us. By taking similar precautions, there's a good chance that you'll love being a homeowner, too.
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