When preparing to buy a home, it’s natural to make sure you have enough to cover mortgage payments, the down payment and closing costs. However, a new study suggests that you’d be wise to set aside another $13,000 or so a year for other expenses.
Homebuying platform Clever Real Estate surveyed 1,000 homeowners to glean insight on what they’re spending on their homes annually. They learned mortgage payments are just one piece of the puzzle when it comes to monthly homeownership costs.
According to the survey, the average homeowner spent the following each year:
- $6,649 on home improvements
- $2,676 on maintenance and repairs
- $2,600 in property taxes
- $1,228 on homeowners insurance
Of those, property taxes and homeowners insurance varied greatly by location, with some parts of the country paying much more than in others. For example, Florida had the highest average homeowners insurance premiums, costing an average of $3,575 per year. Hawaii had the lowest, at an average of $337 per year.
Along the same lines, homeowners in New Jersey, which had the highest state property tax rate, could expect to pay on average five times more in property taxes on a $206,000 home than they would pay if they lived in Alabama, the state with the lowest state property tax rate.
Despite those extra costs, more than half of the respondents—65%—said they’ve never regretted buying a house. At the same time, however, many weren’t financially prepared, with a quarter admitting to having less than $500 set aside for home repairs.
That gap in savings is causing many homeowners to borrow in order to pay for maintenance and home improvements. In fact, 59% of homeowners planning improvements in the next five years said they planned to use a loan or credit to pay for work done on their house. Specifically:
- 29% of those planning renovations said they would use credit cards
- 17% would use personal loans
- 18% would use home equity loans
Meanwhile, 41% said they planned to use just their savings to pay for home improvements.
At the same time, homeowners have also found themselves making another investment in their properties—an investment in time. In fact, 57% of respondents spend more than five hours per month on maintenance, renovations and repairs, the study found.
Before you buy a house, it’s important to consider all of the costs of homeownership so you’ll be able to handle day-to-day expenses, as well as emergencies. Once you’re a homeowner, consider adding a line item to your budget that lets you set aside money for maintenance and repairs when you need it.
There are also other ways you can be better prepared for the costs of homeownership. For example, you might consider buying home repair insurance to provide coverage for household appliances, inside wiring or plumbing if you don’t have enough money stashed away to handle breakdowns in those areas. If you need major home improvements, a home equity loan or home equity line of credit (HELOC) may provide you with a way to finance them.