Homeownership Costs That Can Increase Over Time

When buying a home, many people focus primarily on the mortgage as their main cost. If you choose a fixed interest rate for your loan, you don’t have to worry about interest rates going up over time.

As you budget for your home, however, it is important to be aware that there are other costs of home ownership that can and will increase over time. Let’s go over those now so you can figure out accurately how much home you can afford.

1. Property taxes. Property taxes tend to go up as the value of your property increases. The rate at which this happens can vary dramatically from one area to another. In some parts of the country, property taxes may climb very little, while in others, they can shoot through the roof. They can go up substantially if improvements in the area lead to the neighborhood becoming an up and coming place. Looking up historical records of property taxes for the area can give you some indication of what you might expect. But you should also look up any planned developments as well as trends for the broader region to get a feel for where things might be headed in the future.
2. Insurance. Costs for homeowners insurance can rise over time due to both inflation and real world events. If a weather event damages your house, for instance, that could cause your insurance rates to go up in the future. This is more likely to be an issue in states that are subject to severe weather (i.e. Florida).
3. HOA or condo fees. Another type of cost that can go up over time are fees that you pay to your homeowners association (HOA) or condo association. Both of these types of associations provide maintenance and other services for community amenities. Because the costs to provide these services can go up in conjunction with inflation each year, you can usually expect an annual cost increase to keep up with inflation. Not all associations raise costs every single year. You can check the fee history for a given association to find out how often they tend to raise their fees, and by what amount.
4. Maintenance and repair costs. If you buy a single family home, you will be solely responsible for all maintenance and repairs. Some years will be relatively inexpensive, while others may include major repairs adding up to many thousands of dollars.

That said, maintenance and repair costs can increase over time for two reason:

1. As a home gets older, it may be more prone to developing issues.
2. Inflation impacts repair and maintenance costs as well, affecting the cost of materials and services.

As you can see, inflation is a theme that plays out across housing options. Whether you buy a single family house or a condo or you are renting, one way or another, it will increase your costs. If you work a job where you receive annual raises to keep up with inflation, that can help you offset the increasing costs over time, and puts you in a better position to buy a home.

Buy a Home in Missouri or Beyond

McGowan Mortgages can help you buy a home or refinance in Missouri or 40 other

states. At the consultation, we can also help you calculate how

much home you can afford. We can also answer your questions about the various costs of owning a home. To get started, please give us call at (816) 631-9687 to schedule your consultation.