The “Hidden” Costs of Home Ownership

Military family moving into a home.

During this busy PCS season, many military families are wondering, “Should we buy a house?”  Buying a house is appealing for so many reasons:  feeling like you’re investing in something vs. throwing away money on rent, knowing that you won’t have to move between PCSes, and being able to paint and decorate the way you want.

I’m not hugely in favor of home buying for military families, because I have seen a lot of families stuck in bad financial situations because of houses that won’t rent or sell.  I have written about this extensively, and I’ll probably do it again, but for today I want to focus on just one small aspect of the equation:  all the extra expenses that come with owning a home.

When most people do the “should we rent or should we buy” debate, they consider primarily the cost of the mortgage vs. the cost of rent.  Unfortunately, this doesn’t even begin to cover the expenses of owning a house.  When you rent, you are responsible for rent, and usually utilities, and then whatever damage that you do to the house.  When you own the house, you are responsible for those same things, plus so much more.

Things like:

Painting:  Houses require repainting.  Pretty regularly, actually.  Depending on the paint used and how hard you wear your house, repainting can be required every few years.  Even savvy do-it-yourselfers will still spend money for paint and supplies.

Window Treatments:  Many rentals come with some sort of basic window treatments.  Most houses that you buy do not, especially if they are new construction.  My husband and I bought our first house when we were new-new-newlyweds.  Even though it was small, and had only a few windows, I was still not prepared to drop $200 on cheap miniblinds.

Landscaping, including tree care and removal:  Even if you’re a super-gardener, landscaping costs money.  And most of us don’t have the skills or tools to care for big trees, or remove them when necessary.

Plumbing:  A basic backed up pipe will cost at least $100 to fix.  More major plumbing repairs can quickly run into the hundreds, and even thousands, of dollars.  I have literally had to call a plumber on the very first day we moved into a new-to-us house – the house had been vacant for several months, and a root had grown through the main line out to the sewer.

Appliances:  Stoves, ovens, dishwashers, garbage disposals, built-in microwaves.  None of these last forever, and they’re not cheap.

Flooring:  No flooring lasts forever.  Carpets and vinyl or linoleum flooring have the shortest life, usually between 5 to 10 years.  Ceramic and porcelain tile can last longer.  Hardwood requires regular maintenance to make it last.  These are all in the thousands of dollars categories, and prices can climb with higher grade choices.

Roofs:  This has been a hot topic with my home-owning friends, and I was shocked to learn that a new roof can easily cost $10,000 or more.  Wow!

Heating and Air Conditioning Units:  This is another area that can get super-expensive very fast.  A friend just replaced her whole HVAC system.  It was $9,000.  Ouch.

And lastly, all the little stuff:  Until you have owned a house, it is hard to imagine how many small things can need repair.  Here’s a sample of things I’ve paid for within the last year alone:

  • front door lock,
  • the little sleeves that go around the candelabrum on a chandelier,
  • replace bathroom fan,
  • refinishing bathroom shower pan,
  • recaulking bathrooms,
  • new faucet on sink,
  • glass in outside light,
  • reattach loose siding,
  • gutter clearing and repair,
  • replacing a little piece of damaged wood on the outside,
  • special battery for garage door opener,
  • repair to bannister,
  • sealing bathroom grout,
  • new light switch covers,
  • new ceiling fan, and
  • touch up of exterior paint.

When you’re considering the costs of home ownership, I suggest that people add 20-30% to the price of the mortgage (including taxes and insurance and homeowners association due.)  Then, you’re making a much better comparison between the price of owning and the price of renting.

About the Author

Kate Horrell
Kate Horrell is a military financial coach, mom of four teens, and Navy spouse. She has a background in taxes and mortgage banking, and a trove of experience helping other military families with their money. Follow her on twitter @realKateHorrell.
  • Shannon

    Is that figure per month or per year AND how would you adjust the figure if you are a retired 100% disabled veteran who would not be paying taxes due to an exemption as well as the mortgage payment includes the homeowner’s insurance.

    • Dave

      I’ve owned a home for several years, and the 1% rule is a good starting point for home maintenance. If your home is worth $250,000, you should budget $2500 per year in home maintenance. Break that down per month, and you’re looking a little over $200 per month on average. If you have an older home, you may need to adjust that amount up.

      I would recommend as you set that money aside each month, you keep it in savings, and dip in as the expenses come.

  • Carl

    Military families and personal shouldn’t be owning anything like homes,prolong deployments,not knowing how long you’re going to be home,base closing,not knowing what congress is going to do with pay raises,etc! I’d say saving all your money,single personal shouldn’t be having babies creating families as well,that alone will keep most people out of financial trouble,that’s how it was back in the old navy,that logic helped me during enlistment and I’m sure many others,what you want and what you need is two different things.

    • Fordownr

      Carl, that is just YOUR opinion. I have know folks who have made it work and some who haven’t. OBTW we didn’t buy a house until I put my retirement in.

  • Fordownr

    He’s forgetting A LOT! Mowers, trimmers, blowers and TOOLS! Gas and Oil for the machines, blades and bits for the drills and saws, etc etc etc….

  • Nicole

    A home warranty helps with many of those expenses.

    • Guest

      But then you’re just paying a mortgage insurance premium instead. On average, you’ll pay more for a home warranty than the benefits you’ll receive. How else would the insurance company make money? The only “benefit” is that you won’t be hit with a large cost all at once, assuming the warranty pays out as expected.

      • Guest

        Meant to say a warranty premium, not mortgage insurance.

  • Glen

    The author left out one critical point; equity! If Uncle Sam is going to pay you to live off post, why spend that money paying someone else’s mortgage? If you dump $1200/month into a 3-bedroom apartment for 4 years, You have just hemorrhaged over $50,000 with nothing to show. Sure, you get to walk away from an apartment, but you could also be walking away from 50-100% of a house purchase. Buy a house (preferably in a heavy military footprint), build equity and profit from the sale. This isn’t a magical one-size-fits-all model, but if you are just a little money-savvy and have some intestinal fortitude, ownership can be a blessing. Not to mention how much you are “forced” to learn; snaking drains, carpentry, shingling, landscaping, etc. In the end, there is that feeling of communal autonomy and you OWN your home.

    • 4M

      That’s IF you stay in one place, and IF the market stays steady.

      And that $50,000 didnt all go to principle, very little of it did.

      A $200,000 mortgage at 4% will give you a payment just shy of your $50,000 of rent in four years.

      At the end of those four years you’ll have paid off a whopping 15,000 of principle.

      A house has 6% in closing costs, and will take at least one month to close a sale.

      So that’s $12,000 lost to closing costs, and another $1,000 payment for a profit of $2,000 in four years. And that’s assuming no HOA (a $50/month HOA fee would destroy your profit), that nothing breaks or wears out, that the market holds steady, and ignores the higher cost of homeowners insurance vs renters insurance.

      Move in a shorter time frame and you’ll likely be upside down w/o some help from the market.

      sure you can itemize the interest, but not too many military families would benefit from the itemized deduction at these interest rates with few healthcare expenses and few work expenses.

      • ldajnowski

        You are absolutely correct. The major problem is that most Homes have hidden problems that the realtors and sellers will keep secret and then one is stuck with the major repairs shortly after closing/moving in to their new (Used) house. Buyer beware is not Posted on the For Sale sign outside of the house!!!

      • Guest

        This is spot on. Also, don’t forget real estate transfer taxes, mortgage origination fees, title insurance, inspection fees and other closing costs incurred when you purchase the home. In addition, consider that you’ll have to come up with a down payment. That is money that could be earning a return elsewhere (i.e. opportunity cost). This idea that you’re “throwing money away” and “have nothing to show for paying rent” is crazy. You had a roof over your head for those years. That’s what you’re paying for.

        • guest

          There are a number of good mortgage programs for PCS moves, the last house we bought, we paid 250 for inspection, 250 for appraisal, zero points, no title insurance, and a whopping 150 bucks for the mortgage origination fee through the wells fargo military program. Other then that it was the standard years insurance and real estate taxes up front.

          • Kate

            guest, did your state not charge transfer taxes? In the states where I own property, that is typically a couple of thousand dollars. And title insurance is required by lenders; only the owner’s portion of the policy is optional.

      • guest

        So, do what we do, buy houses on 15 year mortgages, we have 3 right now, highest rate is 2.75% before tax breaks, and are building equity on each at a rate of 1100-1500 a month. Monthly rent covers the mortgage and small repairs on the two rentals, but we make a killing at tax time off of the depreciation and will have a HUGE chunk of equity when they are sold.

    • 4M

      And really the bank owns the home, you just own a big pile of debt.

      Khan Academy has a great video on rent vs buy out there on YouTube.

  • Duane

    I’m moving from Japan back to the U.S. in about 6 to 8 weeks. I’m currently at the crossroads wondering about buying or renting for 3 to 4 years of employment in PA. I want to say thank you to ALL for the positive/negative, pros and cons and thoughts/opinions on buying vs renting. Have a great evening! Best regards

  • Yeah, I agree with you. The big problem is that all most all houses have a hidden cost problem and that sellers or home owners are kept secret from us and then we’re facing the problems after moving to the new house. So to solve this major problem we should hire a good and professional realtor who actually help us to buy a house with our requirements

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