If you're entering the housing market soon, you'll probably have a lot of the same questions as...
Understanding your housing expenses is crucial for homeowners to budget effectively and maintain their property. If you enter the housing market without a thorough understanding of the anticipated costs, it’s likely that you’ll need to revise your plan or budget accordingly. House of Hope provides you with an informative guide to anticipated living costs.
Home Insurance
When purchasing a home, your lender will require you to have home insurance. This housing expense is important to acquire because it protects you financially if your home or property is destroyed or damaged. Home insurance will only cover what is protected in your policy.
Not all home insurance policies are the same. Consider what types of coverage you will need, including
- Flood damage
- Mold damage
- Termite damage
- Earthquake damage
- Hail damage
Be aware of what is likely in your area and plan accordingly to have those events covered in your policy. Keep these factors in mind when preparing your budget for housing expenses.
Property Taxes
While Texas does not have a state property tax, there are local property taxes that homeowners are expected to pay as part of their housing expenses. Property taxes are used to pay for public services, such as schools, roads, police, and fire protection.
The typical Texas homeowner pays $8,700 in property taxes annually. This is important to consider when looking for a house because districts have different appraisal values that can affect property taxes based on the market value of your property.
Utilities and Waste Management Services
Utilities and waste management services are often commonly overlooked expenses that new homeowners might not factor into their budget when purchasing a new home. Managing these housing expenses involves understanding local utility rates and being aware of waste management policies in your community.
Homeowners in Texas pay on average $456 per month. Many factors impact this number, including the size of your property, how often you use appliances, and your internet bill. Homeowners can reduce this housing expense by investing in energy efficient appliances, improving insulation, or conserving water usage.
Waste management services, including trash and recycling pick up, can sometimes be billed separately from property taxes or utilities. When comparing properties for purchase, this can be an additional monthly expense for a homeowner’s budget.
Homeowner Associations
Homeowner associations, HOAs, are organizations in a subdivision or planned community that makes and enforces rules for the properties and residents. If you decide to purchase property within an HOA’s jurisdiction, you are automatically a member and required to pay dues, known as HOA fees.
HOA fees are typically between $200 and $400 per month. HOA payments are collected to pay for unexpected repairs on community areas, such as sidewalks or parking lots.
Additional fines can be issued to homeowners who violate community rules or standards. Most homeowner associations include standards against:
- Ignoring lawn care
- Parking in undesignated areas
- Violating noise restrictions
- Using the property for commercial purposes
- Violating architectural standards
It is important for homeowners to be aware of HOA rules and regulations to avoid penalties and foster a positive environment within their community.
While HOAs are stringent organizations that homeowners need to consider as part of their housing expenses before moving into a neighborhood, there are benefits that contribute to a positive community environment. Maintaining common areas, such as pools and parks, and providing amenities like gyms or security services are benefits that homeowner associations can provide to their community.
Why You Should Understand Your Housing Expenses
House of Hope wants prospective homeowners to be aware of all the expenses that can influence your budget. Understanding your future housing expenses will allow you to budget effectively, helping you to avoid debts and financially prepare for emergencies.
If you’re ready to buy a house after considering the expenses you’ll have to undertake, look at House of Hope’s blog post, The House Buying Process, to learn about how to start your home buying journey.
