15 Extra Costs You Could Face as a Homeowner

When you are a renter, your monthly costs are generally pretty predictable. You pay your rent and any utilities due, and your landlord takes care of most other things.

But once you become a homeowner, many additional financial responsibilities can fall on your shoulders. In fact, here are 15 extra costs you should be ready for when you purchase your own property.

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The extra costs start immediately when you become a homeowner. When your property is transferred to you, you will have to pay closing costs, typically around 2% to 5% of your home's value.

These costs cover things like loan origination fees and transfer taxes. You may also have to prepay several months of taxes and insurance so your lender can put the money into an escrow account.

ALSO READ: What Are Closing Costs?

You will have to pay back not only the principal you borrowed when you got your mortgage but also the interest on your loan. Those interest costs are built into your monthly payment.

The amount of interest you will owe depends on how much you borrow and what rate you are offered. You should shop around with several lenders to find the one offering the lowest mortgage rate.

If you do not make a down payment equal to at least 20% of your home's value, your mortgage lender will likely require that you buy private mortgage insurance (PMI). This insurance protects the lender so if they have to foreclose, they won't lose any money. Although you have to cover the costs each month, this insurance doesn't actually protect you in any way.

ALSO READ: What Is Private Mortgage Insurance?

It's important to insure your property because your lender requires it and because you want to protect your valuable asset. You should make sure your home insurance covers your dwelling, the property within it, and liability in case someone is hurt at your home. Depending on where you live, you may need additional coverage such as flood insurance or wildfire insurance.

Property taxes are charged by your township or county and cover things like police and fire services. These taxes can cost several thousand dollars per year and, in some areas (like high-tax areas), could be as much as your mortgage payments.

Most lenders require you to pay a portion of your property taxes with each mortgage payment. They put this money into escrow and send the funds to your county when taxes are due. If you opt out of escrow, you will have to save for taxes yourself.

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In some places, you are assessed a separate charge to support local schools. The tax can actually cost more than your property taxes, and you cannot opt out if you live in the district -- even if you do not have kids who attend the school. You may also have to pay this money into escrow if you have not opted out.

ALSO READ: Real Estate Taxes: Your Complete Guide

If you live in a neighborhood with a homeowners association, there will be dues to pay. Depending on your neighborhood and the amenities offered, these can range from a few hundred dollars a year to over a thousand dollars a month

Some HOAs also impose fees for certain violations, such as parking a camper in your driveway when you are not allowed to do so. These costs can come as a big surprise if you didn't read the fine print of your HOA agreement before buying.

Maintaining your home is important to protect the expensive systems within it. For example, you'll want to change your water filters if you have a filtration system. And you'll want to clean out your HVAC filters regularly so your units operate appropriately.

You'll have to spend both time and money accomplishing these basic maintenance tasks -- unless you hire someone, in which case your expenses will be even higher.

ALSO READ: Here's What the Average American Spends on Home Maintenance

When you are a renter, your landlord takes care of fixing things that break. But that's not the case when you own your own house.

You'll need to pay for everything from a new roof to a broken washer and dryer when things go wrong. Consider saving around 1% of your home's value each year so you are prepared for both big and small repair expenses.

If you have a yard, you'll need to take care of lawn care as a homeowner. This comes at a cost.

Either you have to pay for a mower and gas for it, and spend the time mowing, or you will need to pay a service. You may also need to fertilize your lawn, which adds cost as well, and could have to pay to maintain a sprinkler system to keep it green.

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In cold weather areas, snow removal is another surprise cost you'll have to incur as a homeowner. Again, you may need to pay for a service to do this. But even if you handle it yourself, you'll need to pay for a snowblower and gas for it -- or be prepared to spend a lot of time shoveling.

ALSO READ: 3 Homeownership Costs That Might Surprise You

Cleaning your gutters is a project that must be done around once a year. You need to make sure it's completed properly to prevent drainage issues. This is a difficult task to handle on your own because it means climbing on the roof. So, you may need to budget for someone to handle it.

Trees can cause issues you will have to pay for as a homeowner. You may need to pay for tree trimming so the trees do not get overgrown. Or if any trees die or begin to encroach on your foundation, you may have to pay hundreds or even thousands of dollars to get them removed.

ALSO READ: 15 Costs You'll Encounter When You Buy Your First House

While you probably had to pay utility costs as a renter, they may be higher as a homeowner. You may need to pay extra for heat and electricity if you have more space. And if you're responsible for watering your lawn and garden now, you could be looking at a higher water bill.

Finally, as a homeowner, you may have extra cleaning costs. For example, you may need to power wash your home's exterior and driveway to keep it clean -- and you will either need to pay someone to do that or invest in a power washer. If your interior space is larger, it could also take more time to clean -- or require you to spend more to pay a professional to do it.

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You don't want to end up moving into your home and having a hard time covering all the new costs. So, be sure to think about all the ways your life will change before you buy. By preparing for shifts in your budget, you can enjoy owning your home without breaking the bank.

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