Five Hidden Costs of Home Ownership

The decision to rent or buy can be complicated. There are a lot of factors to consider—market statistics, home prices, how long you plan to stay in your home, how fast rents rise, and so on. There are online calculators that can give you a rough idea of whether it would be better for you to rent or buy. I personally like this one from the New York Times. Yahoo Real Estate also offers a handy online calculator.

And while these calculators allow you to factor in some of the obvious costs of home ownership—property taxes, homeowners’ insurance, annual maintenance estimates—there are a number of hidden costs that come with owning your own home. recently released a list of hidden ownership costs, which I’ve passed on below, with a few local tweaks:

1. Special assessments. Homeowners’ association (HOA) or monthly maintenance fees are standard costs with condominium buildings and a number of Oahu housing communities. But what a lot of people fail to consider is the possibility that owners, particularly those who own in older buildings, may be hit with special assessment fees to cover the costs of unforeseen repairs that the HOA reserves simple can’t cover. A good example of this is Yacht Harbor Towers, which is currently undergoing a $17-million renovation to repair concrete spalling, upgrade elevators and renovate the lobbies. Yacht Harbor homeowners were assessed between $30,000 and $40,000 apiece to cover the cost of the loan taken out by the association board.

2. Utilities and services you didn’t need while renting. People who have rented for a long time haven’t had to pay the usual home-ownership bills, including gas or electric, garbage, water, sewer and pest control. So they’re often unprepared for the major repairs (cracked water pipe, broken A/C) and other unexpected maintenance costs that inevitably crop up from time to time.

3. Private mortgage insurance. These days, if you’re putting less than 20 percent down on a mortgage, you’ll have to pay for private mortgage insurance, or PMI. According to Trulia, “the cost of PMI has spiked over the last year, and the amount definitely catches buyers off guard.”

4. Penalties and fines. If you live in an HOA-governed community, there are rules that you must follow with regards to the maintenance and appearance of both the interior and exterior of your home (paint color, for instance) and landscape (no weeds allowed). Failing to adhere to these rules will result in fines.

5. Items you didn’t need while renting, but you do as a homeowner. For many new homeowners, the first time they have to purchase an appliance can be an eye-opening experience. And it’s not just appliances—think yard maintenance tools (mower, rakes, sprinklers), window treatments, which can cost thousands, and light fixtures.