Future ongoing expenses
Continuing to save money is important to cover the ongoing costs of homeownership. Here are a few expenses to expect as a homeowner.
Property taxes and insurance
For as long as you own the house, even after you’ve paid off your home loan, you’ll need to pay for property taxes? and homeowners insurance?. Depending on where you live, you’ll have local and state property taxes to pay that go toward funding things such as infrastructure, schools, and services like your local fire department and police. It’s important to pay your taxes on time or you could face penalties. Most lenders? will encourage you to set up an escrow account?, which allows you to pay toward your taxes and homeowners insurance premiums every month on top of your regular mortgage? payment. Then, when taxes and insurance payments are due, whoever maintains your escrow account will make your payments on your behalf. Be sure to understand any additional costs or expenses that may arise if you don’t set up an escrow account.
Hazard and natural disaster insurance
Depending on your policy, homeowners insurance typically protects your home and personal property from damages caused by rain, hail, theft, and fire, among many other scenarios. Most of the time, however, homeowners insurance may not cover the structure of your home from damage caused by natural disasters. That’s what hazard insurance? is for. Hazard insurance may also cover your home in case of an event like damage from a car or aircraft, explosion, or damage from an electrical current.
Most of the time, however, homeowners insurance may not cover the structure of your home from damage caused by natural disasters. That’s what hazard insurance is for.
What’s covered depends on your policy. Hazard insurance doesn’t protect you from all natural disasters, though. If you live in an area that is prone to floods, earthquakes, or mudslides, you may want to look into taking out a separate policy for each as necessary. Both hazard insurance and natural disaster coverage should be options that you can add to your homeowners insurance policy, but it’s best to ask your insurance company what they offer.
Homeowners association fees
Depending on the type of home you purchase, or the neighborhood you buy in, you may need to pay a homeowners association (HOA) fee?, condo association fee? , or planned unit development? (PUD) fee. Homeowners associations are common if you buy a condominium?, townhouse?, or single-family home in a planned community. The purpose of the association and the fees you pay is to protect and maintain the neighborhood environment. These fees may cover landscaping costs for shared exterior spaces, snow or trash removal, and shared structures such as a gym, community room, or pool. The total cost of these fees depends on a number of factors like the size of your development and its location.