What Does It Really Cost to Own a Home Each Month?
Noah found a house he liked in the Charleston area and almost walked away from it. The payment looked too high, and he assumed that settled the question. Then he did something that changed the decision: he wrote out the full list of what it costs to own a house, not just the loan.
Noah is a fictional example, not a real client. But his situation comes up often. Buyers judge a home by one number, and that number leaves out most of what owning actually involves.
Before you decide a house is too expensive, or decide it is affordable, look at the whole picture.
1. The loan itself
This is principal and interest, the part that pays down what you borrowed and the cost of borrowing it. It is the number most buyers focus on, and it matters. But it is only the first line on the list.
2. Property taxes
Property taxes depend on the specific home, so do not guess or use a general average. Ask for the actual tax bill on the property you are considering. Keep in mind that tax amounts can change over time, so ask how the number is determined and plan with some room to spare.
3. Homeowners insurance
Insurance is a real monthly cost for most owners, and it varies by home. Get a quote before you get attached to a house. In a coastal area like ours, also ask early whether the home might need flood coverage, because that can change your total.
4. HOA dues
If the home is in a community with an HOA, the dues are part of your cost of ownership. Ask what they cover, how often they are paid, and whether there are any special assessments. Two similar homes can have very different totals once HOA dues are included.
5. Maintenance
This is the cost people forget because it does not arrive on a schedule. Roofs wear out. Air conditioners fail. Water heaters leak. There is no bill in the mail telling you to plan for it, so you have to plan for it yourself by setting money aside regularly. A newer home may need less in the early years, an older home may need more, and either way the cushion belongs in your budget.
What about mortgage insurance and utilities?
Depending on your loan and your down payment, mortgage insurance may be part of your payment. Utilities are also part of living in the home, and they can differ from what you pay now. Ask about both when you are building your list.
How to test your budget today
Here is the tactical part. Pick one home you are seriously considering and write down each of the five costs with real numbers from real sources: the tax bill, an insurance quote, the HOA details, and a realistic cushion for repairs. Add them together with the loan payment. Then compare that total to your income, not just the loan payment alone.
That is exactly what Noah did. Once he saw the whole picture, he could judge the house on facts. Sometimes the answer is that the home fits and the first reaction was wrong. Sometimes the answer is that it is too tight and a different home is the better choice. Either way, you decide with confidence instead of a guess.
Let me help you build the list
I am Jason Sharon, a licensed mortgage broker with Home Loans Inc. If you are weighing a purchase and want help building the full cost picture before you make an offer, call 843-LOW-RATE. I find the path.
Home Loans Inc - Jason Sharon, Mortgage Broker. Company NMLS #1728740, Jason Sharon NMLS #1281448. Equal Housing Opportunity.
