These Home Expenses Cost the Average U.S. Homeowner an Additional $14,155 Annually

A home is a life-changing purchase. If you’re considering buying a house, you’ll want to prepare for all the costs associated with homeownership. You’ll need to budget for much more than your monthly mortgage payment. A recent study from Zillow and Thumbtack found that homeownership and maintenance costs can total over $14,000 per year for the average U.S. homeowner. Here’s how these expenses break down.

Additional costs beyond a mortgage can total $1,180 monthly

According to new data from Zillow and Thumbtack, additional costs beyond a mortgage payment can cost homeowners thousands of dollars annually. The report noted that home expenses and maintenance costs can add up to $14,155 per year for the average U.S. homeowner. That’s an additional $1,180 monthly, in addition to a mortgage payment.

Additional expenses that make a home purchase more costly include utility bills, property taxes, homeowners insurance, and essential home maintenance. Before purchasing a home, it’s important to consider all potential costs. If you don’t budget accordingly, you could end up house poor.

Unavoidable homeownership costs like property taxes, homeowners insurance, and utility expenses averaged $7,742 annually on a national basis. The same study found that the average homeowner spends $6,413 on annual home maintenance projects.

However, these costs can vary depending on the metro area. The study found that the top three metro areas with the highest hidden costs of homeownership were San Francisco, New York City, and Los Angeles. Homeowners in less costly parts of the country could pay much less.

How to prepare for the hidden costs of homeownership

Anyone considering buying a home in the future should further research the true cost of homeownership to figure out how much they can afford to spend on all monthly housing expenses. Budgeting for these expenses in advance can make it easier to set a home purchase price budget that works well for your personal finances.

Home insurance

Before purchasing a home, you can contact home insurance agencies to get home insurance quotes. You can provide home insurance companies with the ZIP code where you plan to buy and give an idea of the anticipated home features, size, age, and home value. It’s a good idea to get quotes from multiple insurance providers to get the best deal. You can keep more money in your checking account by shopping around and comparing rates.

Utility bills

There are a few ways to learn more about the potential utility costs you’ll pay in a new home. One way to research these prices is to contact utility companies in the area for a pricing estimate. For an estimate on electricity costs, you can look up the address on Redfin and use the built-in WattBuy feature to review the property’s current estimated electricity costs to better budget.

Property taxes

You can review property tax rates for your desired area using local and county websites and use this data to calculate property taxes. Alternatively, many home listings websites include property tax estimates. However, it’s worth noting that what the current owner is paying may not be accurate, especially if the county hasn’t assessed the home’s value recently. Buying a home could trigger an updated property tax assessment, especially if the home value has increased significantly.

Home maintenance

Don’t forget to consider the cost of home maintenance. Experts suggest annual home maintenance costs are around 1% to 4% of your home value. If you plan to buy a $250,000 home, you can expect to spend anywhere from $2,500 to $10,000 per year on home upkeep.

Set aside money regularly for home repairs and maintenance

One way to prepare for yearly home maintenance and repair costs is to save money regularly. This clever strategy can help you avoid credit card debt because when unexpected home repair or maintenance bills come your way, the money will already be in your savings account, ready to tap.

Now that you know what additional costs to prepare for as a homeowner, you can make a more informed purchase decision. Check out our list of the best mortgage lenders to learn more.