Coming Up Short

Morgen Henderson

I’VE BEEN LIVING with roommates since I graduated college two years ago. I decided it was time to buy my own place. I saved diligently and I figured I had enough for a down payment.

I also figured I could handle the monthly mortgage payment, which wouldn’t be much more than I was paying in rent. I was looking for a townhouse or condo, which might cost $250,000 to $300,000 where I live.

What I didn’t grasp, however, were all the other costs I needed to think about. When I added them up, I realized I simply couldn’t afford the sort of house I wanted. Here are all the expenses I learned about—and which made me delay my home purchase, while I saved up more money:

Closing costs. These include things like home inspection, title insurance and mortgage application costs—all the money you have to pay before the house is even yours. Closing costs often run 2% to 5% of a home’s purchase price.

Property taxes. These are generally calculated as a percentage of your home’s value. Property taxes would have added another $180 to $250 to my monthly costs.

Homeowner’s insurance. This isn’t just a good idea to protect a hugely valuable asset. Your mortgage lender will also insist you have coverage. For the sort of home I was looking at, homeowner’s insurance might cost $800 a year.

HOA fees. Townhouses and condos typically have homeowners’ association (HOA) fees to cover the community’s clubhouse, pool, yard service and so on. In my area, they generally run $100 to $700 per month. While condos and townhouses are usually cheaper than single-family homes, I didn’t appreciate that ongoing monthly costs can often be higher.

Utilities. Today, I split the utilities with my roommates. Those utilities come to around $75 per person per month. What if I bought a place? I’d have to shoulder the full burden, paying perhaps three to five times what I’m currently paying. Also, when you’re renting, the landlord sometimes covers some of the utility bills and provides services, such as wi-fi and cable.

Wear and tear. If you rent, the landlord pays for the regular maintenance and takes care of unforeseen problems like mold or water damage. While the cost varies from year to year, average annual maintenance costs might be 1% or more of a home’s value. On top of that, after you close on a house, there are often problems that weren’t spotted when the home was inspected. You could be stuck paying thousands of dollars to fix problems you didn’t know about.

Furniture and appliances. Today, I don’t have a lot of furniture and I don’t own any appliances. I knew I’d need to purchase things like couches, chairs, tables, a washing machine and everything else needed to make a home comfortable. But I didn’t realize just how expensive these things can be. After some research, I figured I might need at least $5,000 to furnish my new home—another reason I decided to delay buying a house.

Morgen Henderson is a writer from the beautiful mountains of Utah. Her previous articles were Saved by Borrowing and Last Questions. She covers a variety of topics, ranging from travel and lifestyle to tech and personal finance. When she’s not typing away at her computer, you can find her baking desserts and watching an excessive number of travel shows. Follow Morgen on Twitter @Mo_Hendi.

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