Owning a home is a major financial goal for many renters and a source of pride for anyone who is already a homeowner. However, achieving the dream of homeownership – and keeping up with all the related expenses – is difficult and, for many, seemingly impossible. While homeownership is not the right fit for everyone, if it is something you want for yourself and your family, there are plenty of resources available to help you get there and stay afloat.
Here is a brief overview of common home expenses and how to budget for them, plus specific community resources for new and established homeowners.
Let’s start with the big one: mortgage payments include four different components: principal to reduce the size of the loan, interest to repay the lender for providing the loan, property taxes, and homeowners insurance. Notably, borrowers can often pay taxes and insurance as part of an escrow. But what is an escrow account? It is a savings account for homeowners used to cover annual property-related costs.
Depending on where you live, there may also be homeownership association (HOA) fees to consider. HOA fees pay for neighborhood amenities, maintenance, and repairs, but the cost itself varies from place to place.
Additionally, there are repair and maintenance costs. These expenses range from anticipated and ongoing items like regular lawn care and appliance upkeep to more costly, unexpected replacements or emergencies. Lastly, while the types of utilities are likely the same items as renting ( internet, water, gas, electricity, etc.), the cost as a homeowner will likely be substantially more given that a home requires more energy than an apartment.
To help manage these and other expenses, we suggest doing the following:
The Minnesota Homeownership Center (HOCMN) is an excellent resource for both prospective homebuyers looking for advice or educational resources and homeowners needing guidance on foreclosure, refinancing, reverse mortgages, and assistance programs. Additionally, here are a few more tailored tips based on your situation:
Are you looking to buy a home?
P.S. Are you a renter in need of assistance? Check out our previous blog post for renter-specific tips and programs.
Do you need help affording your current mortgage or home?
P.S. HomeHelpMN assistance is not available yet, but sign up for their e-news for updates.
Money Management E-Newsletter: October 2021