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NEW YORK — Home buyers not only need to save money for a down payment on a home and calculate the monthly cost of a mortgage, but also calculate property taxes, utilities, routine maintenance costs and property insurance premiums.
A 2023 report from Zillow and Thumbtack found those additional home expenses average about $1,180 monthly, in addition to the typical $1,770 monthly mortgage payment after a 20% downpayment. First-time home buyers can often see these additional expenses as a surprise.
Experts agree that before buying a home, buyers should research insurance costs before committing to a mortgage. Typically, an annual homeowner’s insurance premium is equivalent to about 0.5% of a home’s value. The Intercontinental Exchange indicates that homes in areas prone to natural disasters, such as hurricanes or wildfires, can have homeowners’ insurance costs of $1,000 above the national average.
The 2023 report found that routine home maintenance costs average about $500 per month for items that include carpet cleaning, lawn care and appliance repairs. Larger expenses, including roof and water heater replacements, can be more costly.
Experts suggest setting aside 1% of a home’s value to cover larger repairs. Some buyers also find they need to pay homeowner’s association fees for amenities and shared maintenance costs.
Property tax bills are often equivalent to 1% of a home’s value per year but can vary depending on state and city. Taxes also rise as property appreciates in value or if voters approve a new spending proposal. In terms of utilities, homeowners spend about $3,000 per year on energy, with average water bills at $1,000 per year.
Source: Wall Street Journal (01/02/25) Pinsker, Joe
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