When delving into the realm of homeownership, it’s natural to focus on the upfront expenses like the home price and mortgage payments. However, overlooking the hidden costs can have significant implications on your financial well-being. A recent study by Bankrate sheds light on these concealed expenditures that can catch many homebuyers off guard.
Bankrate’s analysis uncovers that the average hidden costs associated with owning a median-priced U.S. home, valued at $436,291, can reach an additional $1,510 each month. This translates to an annual burden of $18,118 on top of your mortgage dues. These hidden expenses comprise property taxes, homeowners insurance, home upkeep, as well as utility bills like electricity, internet, and cable, which have collectively surged by 26% in the past four years.
In a poignant analogy, Bankrate’s Jeff Ostrowski equates the hidden costs of homeownership to “buying a used car every year.” With these expenses escalating over time, it’s prudent to allocate a buffer in your monthly budget to accommodate them.
Although certain online mortgage calculators may factor in property taxes and homeowners insurance, they often omit critical expenses like repairs or utilities. This oversight can leave homeowners financially strained, a situation colloquially known as being “house poor.”
It is noteworthy that these hidden costs can widely fluctuate across states. In states with steep property prices such as Hawaii, California, and Massachusetts, the average annual hidden expenses surpass $26,000, exceeding $2,100 monthly. Hawaii emerges as the frontrunner with total hidden costs amounting to $29,015. Conversely, in more budget-friendly states like Kentucky, these costs average $11,559 – approximately a third of the expenses in Hawaii.
While Bankrate’s analysis offers valuable insights by collating data from various sources and adjusting for inflation, it’s imperative to acknowledge that additional hidden costs like private mortgage insurance, HOA fees, pest control, or closing costs may further escalate the total expense.
Understanding the landscape of hidden homeownership costs in each state is pivotal when crafting a budget for your new abode. By proactively considering these expenditures and integrating them into your financial strategy, you can help ensure your budget remains robust and sustainable in navigating the financial responsibilities of homeownership.
Get help with personal financial planning
Here at Keel Financial, we specialize in personalized financial planning tailored to your unique circumstances. Our approach is designed with the goal to equip you with the necessary guidance and support to navigate the intricate terrain of homeownership. Reach out to us today to embark on your path to pursuing financial prosperity.
Please note that the information shared in this blog post is derived from Bankrate’s analysis. As prices and costs are subject to fluctuations, we recommend consulting with a financial advisor or real estate professional for the most current information.
Source:
https://www.bankrate.com/mortgages/hidden-costs-of-homeownership-study/
Disclosures
Content in this material is for general information only and not intended to provide specific advice or recommendations for any individual.
Securities offered through LPL Financial, Member FINRA/SIPC. Investment Advice offered through Winthrop Wealth, a Registered Investment Advisor and separate entity from LPL Financial.
