If you’re looking to buy a home, building a house is an excellent way to go. For starters, you get to custom-design the home, deciding on preferred specifics. Next, you could easily make adjustments along the way to guarantee a perfect end result.
There are certain basic costs associated with building a house and they can be classified under actual construction costs. These are the expenses that go into the building process. There are also certain upfront costs associated with buying a home. These include downpayment, closing costs, and monthly mortgage repayments.
In addition to all of these costs, however, there are other expenses that are almost never discussed during construction. These can be regarded as the cost of homeownership–ongoing expenses that you are required to pay as a homeowner beyond your monthly mortgage payments. This article seeks to highlight and detail five of these major costs:
Property taxes make up a significant portion of the expenses of owning a home. The specific fee is typically determined by the city, township or county where your home is located. An ad valorem tax or a system of tax based on the value of your house is used here.
According to Census Bureau data, the average American pays $2,471 in property taxes with the annual median property taxes ranging from $587 (Alabama) to $8,300 (New Jersey). The average National percentage stands at 1.1% with Alabama taxing around 0.37% and New Jersey, 2.13%.
Based on the percentage, Texas ranks 6th at 1.6%, implying that property taxes are quite steep. Property tax is typically paid every single month for as long as you hold ownership of the house.
The table below shows the top 6 and bottom 3 states ranked based on property tax percentages according to recent statistics.
New Jersey 2.1%
New Hampshire 1.9%
Louisiana & Wyoming 0.5
Home insurance sees two categories:
- Buildings insurance;
- Content insurance.
Buildings insurance covers your home’s structure as well as fixtures and fittings. Furthermore, it mainly serves to protect against acts that you may be unable to avoid such as flooding, fire, and storms.
Content insurance on the other hand basically covers property within the house, and that is within your discretion. Alternatively, you could get a policy that combines both.
In Texas, the average cost of home insurance stands at about an annual sum of $1,863 for a home worth about $250,000. This figure is in excess of the national average and this is mainly because of the geographic location and the environmental hazards in the state.
This is why getting a great insurance plan in cities like Austin, Dallas-FW, Houston involves reviewing quotes from various insurance companies and going with the best option.
Below is a breakdown of the premiums offered by the 5 biggest insurance companies by market shares in Texas:
Amica Mutual $3,547
State Farm $1,722
HOA and Condo Fees
If your home is within a region that has an active homeowners' association (HOA) or a condominium association, paying a monthly or quarterly fee is a requirement. This fee typically covers community or general neighborhood services like snow plowing or garbage collection.
There is a possibility of HOA fees rising. This may be a result of a special project such as renovating certain common areas or installation of a new security system.
These fees are very specific to location. For instance:
- Austin sees an average HOA fee about between $400 and $800.
- Dallas sees a couple hundred to over $500.
- Houston HOA fees range from $300 to as much as $1,200 depending on building type and location.
Lawn Care and LandScaping
You can either opt to hire a professional for this or take care of it yourself. However, either choice involves some fee; payment of wages or purchasing lawn equipment in either case.
Lawn equipment can be quite pricey particularly if you need some specifics like a leaf blower or snow blower (for significant acreage). The importance of this goes beyond just aesthetics.
Untrimmed branches and tree limbs can fall, causing damage to windows and the roof. Similarly, falling leaves and overgrown weeds can impede the flow of water in the drainage, clog gutters, affect plumbing or even tamper with outdoor HVAC units.
Heating, Ventilation and Air Conditioning (HVAC) System
HVAC systems typically deteriorate over time and would need to be replaced eventually. However, some maintenance strategies include replacing air conditioner and furnace filters regularly.
Simple tune-ups in AC maintenance may cost between $75 to $200. An extended service contract which would include the entire HVAC system may cost between $150 and $500. However, for technical repairs, a HVAC technician may charge between $50 to $150 per hour.
To keep your HVAC system efficiently running, yearly maintenance is recommended. You could opt for a maintenance plan or service contract that would cut back annual costs.
These secondary costs and fees cover services like:
- General home maintenance costs;
- Utility bills (electricity, internet, and cable);
- Safety measures (alarm systems, motion-detector lights);
- Possible personal purchases for the interior (furniture, rugs).
The cost of owning a new build home clearly extends just beyond construction costs. Although these cost figures might be low relative to actual construction costs, adding them up sees a tidy sum. However, they are all important in their own rights, and you shouldn’t discount them.