Hidden Costs of Homeownership

By Benjamin Temin

In recent months, the JCS Financial Wellness blogs have focused on an assortment of important financial topics that people should consider, such as emergency funds and use of credit cards. Another topic that many may find useful is housing. There is the issue of supply and demand, mortgage interest rates, raw material shortages, increased rental costs, and the list goes on in our society and economy.

I would like to focus on one aspect that often gets overlooked, especially for first-time homebuyers, which is knowing the actual cost of homeownership over time. Described as “phantom costs” by personal finance expert Ramit Sethi, these hidden expenses may not be factored in during the decision-making process as well as cost comparison.

When budgeting, use the 1% rule. Experts recommend setting aside 1% of the total cost of the home for annual maintenance. For example, if a house costs $300,000, it’s a good idea to plan for $3,000 in maintenance costs per year.

This can fluctuate based on several factors that include>>