How to Handle the Hidden Costs of Home Ownership

Whether it be an unexpected one-time repair or just a trickle of little, monthly costs we didn’t account for here are few tips on Handling the Hidden Costs of Home Ownership:
Basic Maintenance. Being aggressive about maintaining your home on an ongoing basis allows you to avoid bigger, scary repair bills later on – but it does cost. Manage these costs by to planning for them – Keep a running spreadsheet of little fixes, touch-ups and mini-upgrades (e.g., putting in a dimmer, etc.). Some maintenance costs, like pest control, may be available on a monthly contract with your vendor, making them much more predictable.
Utilities. Garbage, Gas, Water.  During the buying process, it can be very difficult to predict exactly how much these bills will run. Your best bet is to ask the seller if they will kindly provide you with copies or at least the amounts of their recent utility bills, so that you can have some sort of basis in reality for your own budget and spending plan.
Property tax increases.  Property taxes are based on your home’s value, so as the value of your home rises, your property taxes will likely also go up over time.   Talk with your mortgage professional about how homes are reassessed for tax purposes in your area: how often they are reassessed, when, and whether there are any limits on how much your taxes can go up in a given year. Understanding how tax increases work and what their limits are allows you to predict and project your worst case scenarios in terms of extra costs, years in advance.  It also helps to know that in a down market, your homes value – and property taxes – can also decrease, and to know that your property taxes are deductible on your income tax return. So, if you do have increases, you’ll have a corresponding tax break.
Unexpected Repairs.  This is the reason we get disclosures and inspections and such is to minimize the likelihood of unexpected repair costs. Your first line of defense at managing these costs is the one-two punch you have to execute during escrow: (1) reading your disclosures and inspection reports and getting repair bids for any issues that arise therein, and  (2) obtaining a home warranty to cover things that arise later on. The other common fail is that people allow their home warranty to expire after a year, rather than paying the annual renewal fee (new home owners: expect to see this in the mail 10 or 11 months after closing). Don’t fall into either of these pitfalls: if you own a home long enough, chances are good that you’ll eventually have some unexpected need for a repair come up, whether it’s a plumbing snafu or a roof leak.
HOA Dues.  If you choose to buy a home in a Home Owner’s Association (HOA), you’ll be given a number of disclosures about what the HOA dues are during escrow, so the dues themselves should be no surprise. What can come as a surprise, though, is the fact that dues can go up over time – sometimes in relatively shorter order. Do not skim lightly over what may seem like the least important of the HOA documents you’ll receive: the newsletters and board meeting minutes.
Have you ever had a surprise cost burst your home ownership bubble?  What was it, and what advice would you give for avoiding hidden costs to new home owners?
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