‘Forced to Neglect Your Home’: Taxes, HOA Fees, Upkeep, and More Hidden Costs That May Make Homeownership More Difficult Than You Imagined

Finurah will be bringing you a series of articles discussing the difficult choices associated with purchasing a home. Homeownership is one of the main ways to build generational wealth and to help close the racial wealth gap. But it takes more than a mortgage to buy a home, and Finurah will help you prepare for future homeownership.

Photo by Kindel Media from Pexels

Homeownership epitomizes the American Dream but for many Black Americans, this dream has been out of reach.

Among Black families, 44 percent owned their own home as of the first quarter of last year compared to 73.7 percent of white families, according to the U.S. Census. That disparity is even more significant depending on the city, according to an analysis of census data by the national real estate brokerage Redfin.

But for Black Americans looking to take the step of homeownership, preparation is vital. You don’t want to be surprised by the unexpected costs of owning a home.

“Hidden costs can conflict with other major budgetary items such as mortgage payments, health-care costs, or tuition fees, and you are forced to neglect your home,” Donny Gamble, CEO of Retirement Investments, told Finurah.

“For instance, you are faced with a $10,000 plumbing issue. What do you do if you don’t have the money for this? You live with the leak or water damage until you are able to address it.”

Yet having to make the hard decision not to repair a broken pipe, leaky roof, or even maintain the appearance of your home will lead to larger issues related to your home.

“When you consider the costs of homeownership, you often think about the house maintenance itself – you need to look at the entire property costs,” said real estate investor James Diel.

“When a limb falls in your yard or a storm causes damage, you’ll have to pay to fix the issue, either straight out of pocket or through your home insurance.”

Here are oft-forgotten expenses that homebuyers must take into consideration when purchasing a home.

Property Taxes

If you own a home, paying property taxes is an understood expense. However, the frequency in which property taxes can increase will surprise many homeowners. The cost of property taxes is determined in two ways; first, by local officials who establish the tax rate, and secondly, if your property value increases.

While property taxes can increase yearly in some locations, others will be raised every few years. Either way, homeowners must be prepared for the increase, an obligatory payment that cannot be ignored.

Homeowner’s Association Fees

Depending on the neighborhood you choose to live in, you might have to deal with a Homeowner’s Association or HOA. It’s an organization in a subdivision, planned community, or condominium building that makes and enforces rules for the properties and residents. Anyone who purchases property within an HOA’s jurisdiction automatically becomes a member and is required to pay dues, known as HOA fees.

Homeowner’s associations will determine the cost that every homeowner will pay as a contribution to maintaining the property and its amenities. And these costs will increase over time to meet the shared-community space needs that need to be maintained or renovated.

HOA fees can vary drastically, depending on the property or community. They can range anywhere between $100 and $1,000 per month.

Upkeep of Appliances

Unlike renters, as a homeowner you’re responsible for replacing and maintaining all appliances in your home. Whether it’s an air conditioning unit that needs to be installed or a refrigerator that needs to be repaired, as a homeowner, you have to anticipate that your appliances will need to be fixed or replaced periodically.

Purchasing warranties on new appliances will defray some costs. However, it is always best to have an emergency fund available for these fixes that cannot be delayed.

Appliance repair costs $172 on average, with a typical range of $105 and $241. This includes parts and $50 to $150 per hour for professional service. Standard appliances include refrigerator, freezer, washer and dryer and oven/range.

Expect to spend an average of $172 on appliance repair costs, with a typical range of $105 and $241, according to Home Advisor; his includes parts. The professional service cost will be between $50 and $150 per hour. This range consists of the most common appliance problems. Several factors can affect the total. For example, if the unit is more than 10 years old, runs on natural gas, or costs $5,000 when you buy it new, you’ll most likely spend money to fix it.

Home Maintenance

In addition to potentially needing to replace the appliances in your home, you’ll also need to maintain your home consistently. Extensive repairs such as a leaky roof, broken pipes, mold in walls, and water damage resulting from a flood cannot be ignored, and heating and sewerage systems must be maintained.

Expect to spend between 1 percent and 4 percent of your home’s value each year for maintenance. So if the cost of your home is $200,000, you should probably save anywhere between $2,000 to $8,000 to spend on annual upkeep, estimates home investing platform MillionAcres.

The older the house you are looking to buy, the more likely you will have major repairs early on.

Security Systems and Home Insurance

Since your home is a considerable investment, it only makes sense to protect it. Insurance is a no-brainer; you need it to protect in case of fires, floods, or any other type of liability.

Home insurance costs an average of $1,585 a year, on average, according to NerdWallet’s 2021 analysis. But this can range wildly. If you live in areas prone to floods or fires, insurance could jump a lot higher.

With insurance, you will want to go through the contract’s fine print to understand what you are covered for and what you aren’t.

An added layer of protection is a security system. While some homeowners only opt for an alarm system, others decide to install cameras at key areas in their homes. A basic, do-it-yourself unit could cost about $200. Some also charge monthly monitoring fees that can be in the $40 range. If you opt for a service that patrols, costs could go up to thousands annually.

General Upkeep

Maintaining the appearance of your home will allow you to remain proud of your purchase. Plus, your neighbors will appreciate it, too. Hiring a company to handle landscaping, leaf removal, lawn mowing, and snow removal are all added expenses. Landscaping fees will depend on how large your land is, but the typical cost for landscaping a yard ranges from approximately $1,362 to $5,640, with a national average of about $3,415, found BobVila.com.

In addition, if you own a pool, it has to be cleaned and maintained periodically. Again, this will depend on the size, but the average cost to maintain a swimming pool is $80 to $150 monthly or about $960 to $1,800 annually. For a first-time pool cleaning service, expect to spend $150 to $350 on average.

To maintain your home, it is essential to establish a budget that will allow you to pay your mortgage and related household expenses. Of course, it never hurts to expect the unexpected as a homeowner, which means you should have an emergency fund to handle those surprise repairs.

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