As a homeowner, it’s important to have a clear understanding of your true housing costs. While your mortgage payment is likely your largest expense, it’s just one of many costs you’ll need to factor in to get a comprehensive picture of what you can expect to spend each month.

In this blog, we’ll break down all of the expenses you need to consider when calculating your true housing costs. We’ll cover everything from your mortgage payment to property taxes, insurance, maintenance, and repairs.

Mortgage Payment

Your mortgage payment is the most significant expense you’ll have as a homeowner. It includes your principal, interest, taxes, and insurance (commonly referred to as PITI). You can use an online mortgage calculator to estimate your monthly payment, but keep in mind that this won’t give you the full picture of your housing costs.

The principal is the amount of money you borrowed to purchase your home. It’s the total amount of your mortgage, and your monthly mortgage payment will include a portion of the principal. The Interest is the cost of borrowing money and is included in your mortgage payment. It’s calculated based on the interest rate, which can vary depending on a variety of factors, including your credit score and the current market.

Property Taxes

Property taxes can vary widely depending on where you live, so it’s important to do your research and understand the taxes in your area. Property taxes are usually based on the value of your home, and they’re typically paid on a quarterly or annual basis and are paid to your local government. They are an essential expense to factor into your overall housing costs.

For more information on property taxes and how they are calculated, view our recent blog on Property Taxes and Assessed Values. 

Insurance

Homeowners insurance is another significant expense you’ll need to factor in. Homeowners insurance is designed to protect your home and personal property in case of damage or loss. The cost of your insurance premium will depend on a variety of factors, including the value of your home, its location, and the level of coverage you choose. You’ll want to shop around to find the best coverage at the most affordable price.

Maintenance and Repairs

Maintenance and repairs are ongoing expenses that come with homeownership. You’ll need to factor in costs for regular maintenance tasks like lawn care, cleaning, and minor repairs. Additionally, you’ll need to have a plan in place for unexpected repairs like a broken water heater or roof leak.

Other Expenses

Other expenses to consider when calculating your true housing costs include HOA fees, utilities, and any special assessments or fees for your area. Make sure to include all of these expenses in your budget to get an accurate picture of your monthly housing costs.

By taking all of these expenses into account, you can get a better understanding of your true housing costs as a homeowner. While it may seem overwhelming, planning ahead and budgeting for these expenses can help you manage your finances and make the most of your investment in your home.