Permanent Costs of Home Ownership

In "days of yore", homeowners would dream of the day when they finally paid off their mortgages and were able to live "for free". Many homeowners even had “mortgage burning parties” to commemorate the day.

However, while it is a good feeling to own your home “free & clear”, it does not mean that you are able to live in your home for free. The fact is that your mortgage payment is only a portion of your home ownership expenses and, with every home, there are numerous additional expenses that continue in perpetuity and, unlike the balance on a mortgage, these permanent expenses typically increase each year.

The reality is that there is no such thing as a “free” home.

Below is a list of expenses that you will probably be obligated to pay for as long as you own your home.

The Permanent Costs of Home Ownership

• Real estate taxes: Depending on where you live, your real estate/property taxes likely cost thousands of dollars per year.
• Utility bills: Electric, water, gas, fuel oil, etc.
• Landscaping & lawn care: Whether you mow & fertilize your lawn yourself or hire someone to take care of it for you, lawn and garden maintenance can get expensive.
• Snow removal services: You have a few different options when it comes to snow removal. You can hire someone else to do it for you, or do it yourself. But shoveling, even a little bit of snow, can be dangerous, and do you really want to trudge out into the cold to dig out your car?
• Homeowner's insurance: Not only can home insurance get expensive, your policy might not cover as much as you think! With the recent & more frequent occurence of natural disasters, many insurance companies are refusing to cover certain losses (i.e. hurricanes, floods, wildfires, etc.) and, in some cases, the companies are refusing to cover homes in locations that they deem to be high risk areas.
• Home maintenance: Houses don't take care of themselves. Housing experts say annual maintenance and repair expenses run about 1% to 3% of your home's current market value.
• Security: If you have a security system in your home, there is usually a monthly fee for monitoring.
• Trash removal and recycling collection: In some communities trash collection is provided by the municipality but in others it is not.

Before you know it, you could possibly be spending more on these maintenance and service expenses than you ever did on your mortgage payment.

Planning For The Unexpected

Beyond the anticipated costs of home ownership, there is also a high probability that there will be occasional emergency projects that must be addressed just to keep your house safe & habitable.

READ - How Long Stuff Lasts - A comprehensive list of the estimated life expectancies of your home's components.

Among the unexpected projects that could suddenly become necessary (especially if your home is a "vintage home") are:

• roof repair or replacement
• plumbing projects related to aging pipes
• deteriorating heating systems
• deteriorating air conditioning systems
• sidewalk and driveway repair work
• pruning or removal of mature trees due to storm damage
• other damage caused by extreme weather
• structural and foundational issues
• drainage & basement water issues
• repairing or replacing old appliances such as refrigerators, dishwashers and washer/dryers
• pest and insect infestations
• electrical issues

Unfortunately, if more than one of these unscheduled emergency repairs become necessary, a significant portion of your savings could be depleted.

“Free Houses" Can Also Be "Emotionally Expensive"

Beside the money needed just to maintain the “status quo” of your house, there is also the stress & aggravation of hiring & supervising contractors and/or the possibly of obtaining building permits. These time-consuming projects can add an emotional burden to the cost of home ownership.

KEEP IN MIND: As you approach the end of your ownership of your current home, the next owner (NOT you) will be the beneficiary of the repairs or system replacements for which you will be absorbing the financial & emotional cost. Many of these expenses are not improvements that will enhance your quality of life or the value of the house but rather defensive or emergency expenses necessary just to keep your house habitable & sellable UGH!

Neglected or deferred home maintenance is just another form of a debt which will continue to grow. Usually, neglected small repairs negatively impact your quality of life and, eventually, grow into large expensive projects. Sooner or later, the "neglected home maintenance debt" will need to be paid,

If you are retired or about to retire, consider the following. Your income is now more limited and the growing costs of home ownership may become a larger percentage of your income. As your discrectionary money shrinks, you may need to reduce your budget for social and leisure activites (travel, vacations, dining out, hobbies, etc.). .

NOTE: Once you decide that you need to scale back your leisure activities in order to pay for home expenses, you have, essentially, become "house poor". "House poor" is a term used to describe a situation where homeowners must dedicate such a large portion of their income to housing costs that they are unable to afford leisure activities.

If you are mulling over whether to stay in your current home or "cash out" & move to a more suitable & affordable residence, it might be helpful to read