What Are Your Monthly Home Expenses?

many items go into monthly home expensesWhen you bought your house, did you really look at all your monthly home expenses? You probably focused on how much you could afford to spend for your new house based on mortgage payments. You might have been limited by how much the bank was willing to loan you, combined with your down payment. The banks are helpful to a point – they make sure you’ll be able to pay principal, interest, taxes and insurance, everything needed to protect the asset behind your home loan.

What few homeowners add into the equation of how much home they can afford, are all the other homeowner expenses. There are a lot of operating costs to use your house, bills you pay monthly like water and electricity. On top of that, you also have full responsibility for maintaining your home, making needed repairs and occasionally replacing things like the roof and hot water heater.

Monthly Home Expenses: Financial

You mortgage check is the biggest of your biggest monthly home expenses, and the one you pay first. Ideally you’re including taxes and insurance in that check, so you don’t have to worry about being late.

  • Mortgage – includes principal and interest, which will vary based on the size of you loan and the interest rate. Today’s rates are incredibly low compared to rates which went over 10% (18% in 1981) over the last 30 years (details at FreddieMac.com).
  • Property taxes – are based on where you live. You might only have state property taxes but likely you’re also paying town and county taxes. In some states, it’s important to research rates by town although most people don’t research property taxes until they look at where they want to retire (state property taxes.
  • Homeowner insurance – averaged $978 in 2011 (more details at the Insurance Information Institute website).

Monthly Home Expenses: Operating Costs

As a homeowner, you … own it all. The comfort of your own home, along with the bills and the repairs now that there’s no landlord. You probably have more square feet than the last home you rented and that means more space (cubic feet) to heat and cool but there are lots more monthly home expenses. You might not realize how much all your monthly checks add up to, unless you’re using some type of program to track expenses.

  • Electricity – costs vary across the US from a low of $75/mo in New Mexico to more than $200/mo in Hawaii. You can check your state’s average costs here …
  • Heat – is a tough statistic with so many different ways to heat or cool your house. Here’s a map showing the average spending on gas and electricity across the US, although it appears to be missing the cost of heating oil.
  • Water – varies from nothing if you have a well to more than $200/mo in larger cities, with the average water bill in the US at $51/mo according to LeakBird.com.
  • Phones – aren’t anything like they used to be, and most people have done away with their landlines (20 somethings might not even know what these are). If you’ve got a traditional phone, it probably costs between $20 and 30/mo.
  • Cable – is expensive at $78/mo because there’s not much competition but hopefully things will change as more people voice anger like  this Forbes article, The Cable Bills Too High; Here’s Why.
  • Internet – costs average between $50 and 60/mo, depending on which Internet service provider you use.
  • Maintenance services – like lawn care and pool maintenance can add up quickly, so you have to decide to spend your time or money but for this article, we’ll use an average of $100/mo.

Monthly Home Expenses Include Repairs & Improvements

monthly home expenses include small & major repairsSo it’s hardly surprising that homeowners don’t budget for home improvements and repairs. Let’s add up all the numbers:

  • With the median US house in 2013 costing $247,000, lets use a $200,000 mortgage. That means principal and interest of $1,074 (5% interest rate), taxes at 1.25% or $260/mo, insurance at $82/mo = $1,416/mo to the bank (assumes escrow account).
  • Adding up all the monthly operating expenses above = $557

You’re already paying almost $2,000 a month for your house so it might never feel like there’s enough money for home maintenance and repairs. But what happens when there’s a leak and the estimate for a new roof is almost $8,000? To avoid the added costs of repairs from a leaky roof, or making the wrong decision under stress, you should budget for ongoing maintenance and repairs.

You’re not going to save money ignoring home maintenance, you’re going to spend more money plus deal with a lot more stress. If you plan and save for a new roof, you’ll avoid repairs from a leaky roof (attic insulation, soggy drywall and more) and you’ll have time to find a reputable roofing company rather than going with the cheapest roof or the only roofer to give you an estimate the day after the leak.

You should budget 1 to 2% or $200 to 400/mo ($2,500 to 5,000/yr for a home worth $250,000) for ongoing maintenance and plan for replacing home features like your roof, hot water heater and more than we can explain here but we’ve got you covered. To help you plan major home updates, we found these 2 articles for you:

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About tinagleisner

Tina Gleisner is the founder of the Assn of Women Home Owners and the Assn of Home Professionals. With more than 30 years experience owning homes across the US and 8 years running a handyman business, Tina is building an online community to connect homeowners with home professionals that deliver quality products and services. She is passionate about giving women a comfortable way to learn and plan projects to protect, enhance and enjoy their homes.

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