5 Reasons Owning a Home Might Cost You More Than Expected

Young girl poses with keys in front of new car parked in front of a house.

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Think you can afford a home? Before you buy, gear up for these surprise expenses.

Key points

  • Owning a home means paying more than just your mortgage.
  • A number of unavoidable homeownership costs could rise over time, making your property more expensive.

One financial benefit of owning a home is getting to sign a mortgage and locking in your monthly housing payments for what could be a 30-year period. By contrast, when you rent a home, your monthly costs could rise from year to year as your lease gets renewed.

But while you might think you can afford to own a home based on what your mortgage payments look like, you may be surprised at the way your peripheral housing costs rise. Here are five reasons why owning a home may prove more expensive than you'd like.

1. Your property taxes could rise

The property taxes you start off paying aren't necessarily the taxes you'll continue to pay. Some towns assess property values every year. That means your property tax bill could change every year. Granted, it could drop from one year to the next. But for the most part, property taxes have a tendency to rise over time, not do the opposite.

2. Your homeowners insurance could get expensive

Homeowners insurance protects you, as a property owner, in the event of damage. But the cost of your premiums could rise over time, even if you don't put in a lot of claims against your policy. Also, certain home features might cause your insurance costs to rise, such as if you decide to put in a hot tub. Though there are steps you can take to lower your insurance costs, like installing an alarm system, all told, those premiums could increase through the years.

3. Your HOA fees could increase

If you buy a home that's part of a homeowners association (HOA), you'll generally be required to pay monthly dues. Often, those dues will cover things like common area maintenance. But those dues could also rise over time, making your housing costs more expensive.

4. You could get stuck paying PMI

Many lenders will accept less than 20% of your home's purchase price as a down payment. But if you don't put down 20% on a conventional mortgage, you'll be forced to pay private mortgage insurance (PMI). PMI can amount to up to 1% of your loan amount. For example, if you're borrowing $300,000 for a home, you might pay an extra $3,000 a year or $250 a month. You can eventually have PMI canceled once you have enough home equity, but until that happens, those costly payments could be a burden.

5. Maintenance and repairs could get costlier as your home ages

When you own a home, you need to sink both time and money into its upkeep. But as your home gets older, more issues could arise, making your home more expensive to maintain. Plus, in time, appliances could break down, and systems like your air conditioning or heat could malfunction. The result? High repair costs that really deal a blow to your budget.

While homeownership can lead to financial stability, it can also throw your finances for a loop. If you're going to buy a home, make sure to account for all of the costs involved and consider the ways they may rise -- sometimes significantly -- over time.

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