Anyone Else Surprised by How Much Owning a Home Costs?

I don't have a number for you, but is does seem like there's ALWAYS something that needs changed, fixed, updated or replaced, doesn't it? I think that's always a shock for home buyers.

For some people--renting IS the answer. In some cases, it just makes more sense. But overall, real estate is usually a good investment, especially if you are "in it" for the long haul.

I've always borrowed HALF of what the bank says I'm "approved" for and that definitely leaves wiggle room, so that has always helped us a great deal. So does enough of a down payment that PMI is not required. So does being otherwise debt free (no credit card debt, car payments, etc.
I just don't ever want to be a slave to a mortgage!

if it weren't for the fact that my husband is an absolute wizard with home repairs and renovations there's no way we could afford to live on this farm. there are always always always more things on the 'need to fix' list than he can keep up with.
khairete
S.

We factored home maintence into the cost of our house before we bought. The bank lender advisor we met with before we bought advised to plan for a minimum of $5,000 per year, more if we were buying a home over 15 years old, to plan for repairs and upkeep, so we just figured that into what we could spend. Then we opened up a specific savings account for that purpose. We "paid" that account like any other bill, $415/month. We were luck enough the first year not to have much beyond replacing the garbage disposal. The second year though we had to replace the furnace, which we were able to pay cash for because of that account.

On average, 750 a year. I have owned the house for 20 years and 16 of them nothing major has gone wrong.

I know renting is not cheaper it is just easier to budget. After all in 15 years I will have no house payments or rent, ya know?

We built which may be why there is a difference in numbers from most. This year is the roof but apparently that is storm damage so the insurance gets that one. :)

it sucks when everything goes at once. But overall - I would choose home ownership over renting ANY DAY!!!

My neighbor is renting - her landlord has taken TWO YEARS to fix the floors from a leak. She's moving out at the end of this month as the landlord doesn't want to put money into the house.

Nothing in our home is "easy" - what some would say is a "five minute" project? Turns into an all day thing!! no kidding - the ceiling fan in the master bedroom? Supposed to take about 15 minutes according to the directions - and in someone else's home - yep! Ours? Nope!! All freaking day! Wires, etc. urgh!!

Windows? I would replace them with more energy efficient ones. Yes, it's a big cost, however, so worth it in the long run!!!

We've lived here for 16 years. We have replaced the roof ($5K), replaced the windows ($7,500), replaced the garbage disposal ($250), replaced the garage door ($1500), painted the house (outside) $3K, replaced the family room floor (got a total steal on this project!!) $2,300!!!! Replaced the water heater ($400 as my husband did it himself). This has been spread over time.

I could pull out our books on the house and tell you - but really - each home and location is different.

I would replace all carpeting with hardwood floors - that's me. Next up is the kitchen - hopefully this summer - replace the floor, new refrigerator, dishwasher and add a pantry, above stove microwave and granite counter tops).

OneandDone is wrong - I am a professional financial planner. Home ownership is NOT a good investment and never has been. Home ownership is a lifestyle choice. Historically, residential housing has returned just .4% annually from 1890 to 2004. I would love to see what the figure is these days (okay, I am in South FL and we are STILL in the toilet).

In addition to the above (and yes, even today you can do better with bonds!), there are other major problems with home ownership as an investment.
1. It is an illiquid investment - it is not easy to cash out and not normally quick.
2. High leverage - you normally borrow A LOT in order to purchase.
3. No diversification - just this market and this location. You can get wiped out by natural disaster (hurricane, earthquake, etc.) or wiped out by your location becoming a disaster (can you say condos in Miami).

So choosing to own a home usually has to do with wanting the things that can come with it: stability (for better or for worse), being able to make modifications you wish, backyards, etc.

Cheers,
C.

Prioritize the repairs.

Older homes have different issues than newer ones. We had to get our sewer main replaced, but we got $1K back and it's apparently "time" for the homes in our area. Plumbing companies were busy a few years back. We have an appliance warranty that has paid for things like repairs to the air conditioner, replacing the garbage disposal, and replacing a dryer, water heater and dishwasher. DH is our number cruncher and he says it's still in our favor and we're eyeballing an old furnace.

It can be a lot, but I try to keep the long view. When I rented, we paid nearly as much in rent, PLUS utilities, plus pet rent and that was 9 years ago. Friends renting a similar townhome currently are paying $2K a month, which is more than our mortgage.

I agree - it's a shock to go from renting and just calling the landlord to having to fix and pay for everything yourself! We've had to replace our heater which was extremely expensive. Then, just over a year later, had additional problems with the heating system that cost yet another arm and leg! OUr hot water heater was supposedly under warranty. The pilot light would not stay lit. We called the warranty repairman - said nothing was wrong but if we wanted him to clean it out, he would charge us $75. We said no thanks and vacuumed it out ourselves. Then we called a friend who is a plumber and he looked at the hot water heater and also said nothing wrong. After 2 years of constantly lighting the pilot light (about 2 - 3 times per day!) we were no longer able to get it lit and had to replace it! We had leaking plumbing that also had to be fixed.
Yes, it's cost us plenty but I still enjoy knowing that the house is ours and that we can't be summarily evicted and we do take pride in home ownership!

The great thing about owning a home is that everytime you replace/update/repair, it can add value to your home if/when you sell it.

When the Landlord does the repairs, they are doing it for their own benefit, because, what if they decide to sell the property and then you have to move due to their decision? Of course, this applies to homes, but apartments can change managements and that can make repairs more difficult if their new company isn't as responsive as you would like. With owning a home, you can choose your own repair company instead of waiting on their preferred vendor.

My husband is a little 'too' detail oriented on maintenance, which **sigh** I have to appreciate him being mean and anal sometimes. So, we replace our air filters about 4 times a year (they cost about $8 each), A/C maintenance (and we had to have someone come out on a Sunday because it pooped out in the middle of the night in one of our worst heat waves - $100). Lawn care in the summer - $40 every two weeks or so. We replaced a lot of our carpeting about 5 years ago with wood laminate - a couple grand I guess. But I enjoy my mortgage payment each month because it's a great, simple, modest home.

I just wish I could bite the bullet for a housekeeper :)

EDIT - I have to add that choosing our own security system is a great asset, too - only we have access to our house and don't have to worry about unneccesary visits.

Our home warranty covers *almost* everything...the most we've had to pay for fixing our roof was the $50 copay. Plumbing problems? $50 copay. Broken dishwasher? $50 copay. You get the idea. Home ownership is an expensive pain in the behind...but I love it because it's MINE and I can do with it whatever I want. But, yeah, that home warranty has paid for itself several times over.

We've also rented and got really lucky with our landlord. When the microwave broke, we had a new one within 24 hours. When there was a plumbing issue, they had someone out there right away. We just got really lucky, so we DID enjoy renting. But I've heard horror stories about renting, too...

I think it's a personal choice. But buyers should certainly be made aware of the fact that paying the mortgage and taxes is just the BEGINNING of actually owning the home. There probably are people who just don't know what it takes to maintain a house.

Yes, it's an investment. We expected it to come with problems and extra costs because our home is 109 years old! And I grew up with a single mom who taught me how to do my own taxes and a household budget, including repair and upkeep of a house. We do a lot of work ourselves, though. We recently put in a new floor, sink and toilet in the bathroom. We've also ripped up all of our carpeting and replaced many doors. I fixed the lock plates in the door jambs so the bedroom doors close right. I could go on and on, but yes, we knew what we were getting ourselves into, and the payoff when we sell it should be pretty good :)

It's just part of it. Like a car you have regular maintenance (oil changes/tires/windshield wipers) and washing and waxing. It shoudl not be any different for a home.

People are not told about this when they go and buy a house and buy more house than they can actually afford (with the maintenance factor). We didn't buy a house as an investment but somewhere to live. If it went up in price that is good but if it didn't that was fine as well. We just looked for a good neighborhood and lucked out getting our home in a new development where there were only 8 houses on the block at the time. We watched the block fill in over a year or so.

Our roof was replaced at 20 years because of two hails storms within two days of each other and we were considered a disaster area because of the number of houses that were involved (insurance paid for it). We also just had the hot water cold water hose break and flood the house (insurance paid for it). So we have to get new carpet for the master bedroom, bath and closet and a repair or two to the heating closet in the garage. Oh yes, we replaced the garbage disposal and sink with money from the roof. The dishwasher was replaced at year five and is going strong. Garage door is next and then the washer and dryer. Before I retired I will get a new frig (39 yrs old) and put the older one in the garage for beverages and such.

Also it depends on the location you buy your home as to the cost of the ownership. New Jersey is one of the highest states for property taxes and insurance and that has to be figured into the ownership. I would love to move back home (NJ) but it is not feasible and I would miss the wide open spaces and the bright stars at night.

If you didn't have a home you would still spend the money on something else.

The other S.

Yes, ownership is overrated, especially in our state. (I see you are in New Jersey which = taxes through the roof!)

I never really look at us owning a home until we pay off the mortgage. To me, the bank IS the landlord.

Maintenance and repairs are an often overlooked part of home ownership. We believe the repairs can be mitigated to a certain extent by good maintenance and upkeep programs on our part - rechaulking, regrouting, good cleaning, replacing rotten wood, etc. We just set aside as much as we can in anticipation of the uh ohs and maintenance. Plus we spend a lot of time watching sales and end of season/display items. We either store the items or we replace them right away. For instance, we just installed a $20 kitchen sink (floor model so deep discount) since our porcelain sink was cracking and chipping. Last year we replaced all of the guest bathroom fixtures (tub/shower faucet/drain, sink faucet/drain, toilet handle, towel bars, soap dispenser, etc) for under $125. We spent all year collecting similar finished pieces until we had them all. The vast majority were floor models at deep discounts. Also we bought a $2000 front door for $600. It was a special order return my husband offered cash on. The store took his offer so now we are storing the door and waiting for better weather to install it. Finally we do most of the repairs ourselves to save the money or we barter with relatives to help on projects we don’t have the expertise. Beer and fajitas buys a lot of good will in our family. The only exception was the pool renovation since it was just too major of a project. We love our home and would never rent. We want to own this house at the end of it all so it's part of the process. Good luck.

You sound exactly like us. The thing is that a home only cost you as much money as you are willing to put into it. That means that we decide what we can live with and what is really important to fix. Leaky pipes are a must to fix, but cosmetic stuff like floor stains are not. It doesn't mean we totally ignore floor stains, but it does mean it's not on the top priority list and can be done in our leasure when we have the money. The other thing is the age of the house. Older homes are more often affordable than younger homes. The disadvantage of the older home is that people don't maintain them, so the buyer winds up with stuff breaking down left and right. The disadvantage of younger homes is the higher property taxes and you don't know where the builder got his supplies. (Chinese dry wall has a dangerous compound in it that can cause respirtotory problems.) Also, homes that are younger are mass produced and the quality may not be there. (Thinner walls, chimneys too low=carbon monoxide poisoning, etc.) Old houses may contain lead paint or asbestos. You have to weigh what you're willing to/can put up with. My hubby and I prefer the older homes, because there's more windows, they are usually a heavier structure, and you know what you're getting into. (Things aren't always hidden.) That said...We try to do most of the work ourselves to save money. We're older now, so there is a lot we can't do. We interviewed a lot of contrators and specialized services like masons, roofers, and remodelers. We managed to find a contractor that we could cut a deal with....He supplies the labor, and we supply the material. This is great, because sometimes you can get stuff cheaper than a contractor can when it goes on sale at various lumber yards/home centers/harware shops. You can even find goodies on clearance! We found boxes of 12X12 beige ceramic tile for $7.50! (11 tiles/bx.) It's standard and plain, but looks great. We really got a little too fussy with our house. We upped the electric, which meant that the curcuit box had to be changed and had all the wire replaced with brand new wire with a dedicated outlet in each room. Our contract is still laughing at us and tells us that we have enough wattage to plug in all our neighbors. We are now stripping the old wire to take it to the recycling center, which pays money for just about anything. We also had a bathroom added, that wasn't needed but we did it anyway. (Sold the old copper pipe at the recycling center for $90.) We always take off to act like we are there to help, but we are watching the workers. If we see anything or come up with something we want added, we can tell them right away. What your contractor takes out, you can sell. Once you replace stuff or have it done correctly, you don't have to worry for another 10-20 years. Oh, you asked about prices....($800 for the electric upgrade and curcuit box change, $1600 to replace second flr. electrical wiring, $3,000 to replace the main flr. and basement wiring and add an outlet to the basement room, $3,000 for the new bathroom, $5,000 for the huge porch...Porch was our mistake....We did it wrong the first time.)

I've been a homeowner since I got married in 1990. I grew up in a rental apartment. There have been so many hidden or unexpected costs to owning a home. If I had to do it all over again, I would not opt to purchase a home. There are people who say that renting is throwing money away, but when you think about how much the interest on a mortgage is, and how much you really paid for your home, renting seems like the better investment.

I saw you mention this post on another question.

We budget for $10K in repairs per year. We put $850 in a savings account every month. Now that I am home full time, we have moved that to $500 since I am here to do most of the work myself.

I would much rather own than be at the mercy of a landlord again. Do I like that I'm responsible for the repairs? Heck no! I'd like other people to pay for it! LOL! But it's our home. It's our castle!

Way too much. But I don't have a choice. I have too big a heart for animals and must be able to keep and rescue. Add to that my daycare and many owners would not want that liability. It's a lot for sure.

Well, to be honest not everyone has the repairs all the time that you are mentioning. I know that repairs do happen at unexpected times though. It sounds like you bought a fixer upper. Not something in good shape or newer. That's okay if you guys enjoy doing that kind of stuff.

In our Habitat homes we actually have the home owners pay extra on their house payment and it goes into a repair fund that they can access just like any savings account for repairs. It is really helpful for them to have that little bit of money just in case.

I know what it's like when the home is not what you expected. My house is having issues right now too. It's an older mobile home so really, I really do understand.

Shocking, no, because people told us that ad nauseum going into our first house and because it was 100 years old, we had a pretty good idea of what needed to be done.

Our newer house is 50+ years old but we had a home inspection before buying and accurate repair records from the prior owner, so we knew going in how much life is left on the roof, siding, windows, heating system etc. We should be fine on major repairs like those for at least another 5-10 years (knock on wood). Our only true surprise was the septic system failing, but that was because it never should have passed inspection.

This is exactly why we rent. Sure, we dont OWN any property, but what we do own is a savings account. Our rent is decent, a mortgage would be more. We bank a little bit every month. We can up and leave whenever we want to, and when something breaks, "not my problem."
We spend Saturdays at the park or hiking or at a museum ... while our neighbors paint, mow the lawn and do things around the house.

My parents are constantly on my case about getting a house. No thanks. I'll let my small savings account grow and let others play in the housing market.

And another thing, after you own your house you still have to pay taxes on it! My retired Grandma pays more in taxes each month than we do in rent.

It isn't a shock to me now, but it sure was a shock to me when we bought this house! I was only 23 (almost 8 years ago) and it was a foreclosure. This was before the market tanked- it was actually at the height of the real estate boom- so foreclosures weren't sitting on every corner. We got a decent deal on the house, but man, we made up for it in almost every other area. Right off the bat, we had to get over $20,000 in state and federal tax liens taken off the house and then we had to sink $30,000 in repairs just to make the house liveable- new flooring throughout, new toilets, repair dry wall holes, paint the entire house, the list goes on.... We have almost an acre and the entire backyard was solid woods. My husband cleared all the woods and made a backyard for our kids- paver patio, retaining walls....to the tune of around $100,000 retail. Lucky for us, he owns a landscape construction company, so it didn't cost nearly that, but still, it is money we will probably never get back. We have also painted the outside of the house (shutters and trim), replaced the gutters, replaced both garage doors, totally remodeled our kitchen, remodeled the master bath (twice, once insurance paid for b/c of a leak/mold), finished our basement, tore out insulation in the attic because of 'pet' raccoons living in it- then sanitized and replaced with new insulation, replaced blue max pipes (just about all houses built in the late 80's and early 90's around here had blue max piping and just about every one of them has leaked and been replaced- ours were just under $4000 to fix).....gosh, the list could probably go on FOREVER with this money pit. But you know what? I would do it over again! If we had a bought a new starter home when we bought this house, then we would probably be stuck there due to the market crash and have a lot less room and by now, a lot of the same repairs/upgrades....and, in 13 short years (we refinanced) this house will officially be ours! We have a reasonable interest rate and to be honest, I wouldn't be able to rent a house in this area and this size for less than my mortgage, insuance & taxes. I would just hate the thought of paying someone else's mortgage and being left with nothing to show for it.

No, not really a shock here. We went into home ownership knowing we would have expenses, sometimes big ones.

We have built 2 homes and even though you build a home and it is brand new.... you still have regular upkeep that is expensive as well as the repairs and upgrades along the way.

I think a lot of people do not think about the costs of running a home when they purchase and that is how some people end up with foreclosure. Live below your means and don't buy at house at the maximum amount that the banker tells you that you can afford.

We pay about $12,000 a year on property taxes and $3000 on home insurance. We don't escrow that money... we prefer to let our money work for us vs work for the bank. We have a mandatory HOA that is $400 a year which is nominal. We are always making upgrades, etc to improve the house and yard. We just know that we are going to spend extra money on the house and we prepare for that ahead of time.

Good luck...

I don't have a handy number, but we weren't surprised at all. When we bought our house we came into it knowing we were going to have to maintain and fix up, and sometimes shell out more for bigger problems. We wouldn't go back to renting either. We love our house, and we bought at a great time in a great place.