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The Hidden Costs of Homeownership: What New Home Buyers Need to Know

Buying a new home is an exhilarating experience, filled with dreams of decorating, landscaping, and settling into a space that’s uniquely yours. However, the excitement can sometimes overshadow the less glamorous aspects of homeownership – particularly the unexpected expenses that can catch new homeowners off guard. In honor of National Homeownership Month, we pulled together a list of important additional costs that first-time buyers may overlook during the home buying process.

Property Taxes

Property taxes are often one of the most substantial ongoing expenses that new homeowners face. In Texas, our property taxes are some of the highest in the country! These taxes are based on the assessed value of your property and fund local services like schools, roads, and public safety. The amount you owe can vary widely depending on your home’s location and value. Keep in mind that property taxes can also increase over time, especially if your property appreciates in value or if the local government raises tax rates.

How to Prepare:

  • Check the property tax history for your county or tax district.
  • Determine if your mortgage company collects and pays your property taxes.
  • Use online calculators to estimate your annual property tax bill.
  • Set aside money each month in a dedicated savings account to cover this expense.
  • If you find yourself too far behind on your property taxes, consider taking out a property tax loan like the ones we offer.

Homeowners’ Association (HOA) Fees

If you’re buying a home within a planned development, condominium, or townhouse community, there’s a good chance you’ll have to pay HOA fees. These fees cover the cost of maintaining common areas, amenities, and sometimes even services like trash removal or landscaping. HOA fees can range from a modest amount to several hundred dollars per month, depending on the community and the services provided. In fact, HOAs collect over $100 billion dollars in fees and dues per year in the United States.

How to Prepare:

  • Determine if your mortgage company collects and pays your HOA Fees (this only occurs sometimes).
  • Review the HOA’s financial statements and budget to understand what services are included.
  • Ask for information on any planned special assessments or fee increases.
  • Factor the monthly HOA fee into your housing budget.

Maintenance and Repairs

One of the most overlooked aspects of owning a home is the cost of maintenance and repairs. Unlike renting, where your landlord typically handles these expenses, as a homeowner, you’re responsible for fixing anything that breaks. This can include routine maintenance like lawn care and gutter cleaning, as well as unexpected repairs such as a leaky roof or a broken HVAC system – a particularly important repair considering some of our hot summers in Texas.

How to Prepare:

  • Budget for annual maintenance costs, which typically amount to about 1-2% of your home’s purchase price.
  • Set up an emergency fund specifically for home repairs.
  • Conduct regular inspections to catch and address issues early. Preventative maintenance can save a lot of money in the long run.

Becoming a homeowner is an exciting milestone, but it’s crucial to go into it with your eyes wide open about the full range of expenses you’ll encounter. By preparing for property taxes, HOA fees, maintenance and repairs, and other “rainy day” expenses, you can better manage your budget and avoid financial surprises. And remember, if you find yourself behind on your Texas property taxes, contact us for advice or a property tax loan.

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