What Homeowners Need to Know: Ongoing Costs, Debt, and Pitfall Avoidance 

What Homeowners Need to Know: Ongoing Costs, Debt, and Pitfall Avoidance 

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By Bromwich+Smith staff | Reading time: 7 minutes | 1394 words | Date: 2023/09/05

Becoming a homeowner is a substantial milestone in life for those who choose that journey. Homeownership is not the right step for everyone, and regardless of your financial situation or life path, it's important to understand the ongoing financial responsibilities and potential pitfalls that come with homeownership.  

Ongoing Costs of Homeownership 

When you buy a home, your first thought is about the sale price but your financial obligations continue well past the initial purchase price. Being aware of these ongoing costs is crucial for effective budgeting and preventing financial worry down the road. 

1. Mortgage Payments 

Your monthly mortgage payment is typically the largest ongoing expense. It consists of principal (the amount you borrowed), interest and often private mortgage insurance if you didn't make a sizeable down payment. Your mortgage will vary depending on if you went with a variable or fixed rate. There are pros and cons to each, and the decision is best talked through with your mortgage professional. Assuming you chose a fixed rate, your mortgage will stay the same throughout the term and will be easy to budget for. If you opted for a variable mortgage, you will need to be aware of the current rate each month to accurately budget for the ups and downs. Have a plan in place on how to adjust your budget if your actual price is higher than your monthly budgeted allotment. 

2. Property Taxes 

Property taxes vary depending on where you live and the assessed value of your home. It's important to budget for these taxes, as they can change over time and significantly impact your finances. You may have options to pay monthly or yearly, so be aware of payment plans available and determine what works best for your budget.  

3. Homeowners Insurance 

Homeowners insurance protects your property from unexpected events such as fires, theft, and natural disasters. Premiums vary based on factors like location, coverage, and the home's value. You may see rates change over time, and it is important to keep your insurance provider aware of any upgrades as it may affect your rates. A new roof may decrease your payment, but upgraded fixtures, or a wood burning fireplace may increase them. If you purchase a condo or townhouse, there may be a requirement to have insurance prior to your purchase.  

4. Maintenance and Repairs 

Homes require regular upkeep to stay in good condition. Budget for routine maintenance like HVAC servicing, roof inspections, and landscaping. Additionally, set aside funds for unexpected repairs, like furnace or water tank replacement, major appliances, or window repair which can be costly if not planned for. 

5. Utilities and Services 

Monthly utility bills, such as electricity, water, and gas, are ongoing costs that need to be factored into your budget. Don't forget expenses like internet, cable, and trash removal. 

6. Homeowners Association (HOA) or Condo Fees 

If you live in a community with a homeowners association, you'll likely have HOA fees. These cover shared amenities and maintenance of common areas. Be aware of these fees and their potential to increase over time. Condo fees are similar, and can also carry the dreaded special assessment cost. At any point the board determines the need, they can call for a special assessment which could put you at risk for owing thousands of dollars. 

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Debt Management for Homeowners 

Taking on debt to purchase a home is often necessary and unavoidable, but managing it wisely is fundamental to maintaining financial steadiness. 

1. Avoid Overleveraging 

When buying a home, avoid stretching your budget too thin. Your mortgage payment should be comfortably manageable alongside your other expenses just because you qualify for up to a set amount, doesn’t mean that’s what you need to spend. Overleveraging can lead to financial stress and put your home at risk if unexpected financial challenges arise. Find a place in which you are comfortable, and do not focus on spending the full approved amount. 

2. Emergency Fund 

Maintain an emergency fund to cover unexpected expenses such as job loss or major repairs. This can prevent you from relying on credit cards or loans when financial hardships occur. An emergency can pop up at any time with no warning. Being prepared ahead of time for the worst-case scenarios will help put you in the drivers seat. 

3. Refinancing Consideration 

Refinancing your mortgage can be a smart move if interest rates drop significantly. It can lower your monthly payments and save you money over the life of the loan. However, consider the associated costs and potential impact on your overall financial plan. 

4. Avoid Excessive Debt 

While homeownership comes with numerous costs, be cautious about taking on additional debts. Large credit card balances and high-interest loans can strain your finances and jeopardize your ability to make mortgage payments. 

Pitfalls to Avoid 

1. Not Budgeting Realistically 

Create a comprehensive budget that includes all homeownership-related expenses. Set yourself up for success with a realistic plan. If you know you are going to head to your local coffee place every day on your way to work then add it into the budget, otherwise you are at risk of overspending throughout the month and putting items on credit that you may not be able to pay for. Remember all expenses even the ones that don’t occur every month, as well as any additional sources of income.  

2. Neglecting Maintenance 

Putting off routine maintenance can lead to more significant problems down the line, resulting in higher repair costs. Regular upkeep can prevent small issues from becoming major headaches. This is the same when it comes to your car, small bills for inspections and repairs now or a larger bill when a larger item wears down. 

3. Skipping Home Inspection 

Before purchasing a home, invest in a thorough inspection. This can reveal hidden problems that might not be apparent during a casual viewing. Addressing these issues before purchase can save you money and headaches. Even if you don’t see a problem, or feel comfortable that the buyers are not hiding anything, ensure you are covering yourself and invest in a proper inspection. 

4. Underestimating DIY Projects 

While DIY projects can save money, they often take time and lets be honest some tasks are best left to professionals. Underestimating the complexity of a project can lead to costly mistakes.  

5. Ignoring Future Resale Value 

Even if you're planning to stay in your home long-term, consider its resale value. Trends and preferences change, so make improvements that will benefit you now and potential buyers in the future. Consider things like a 1 bedroom vs 2 bedroom, garage, and curb appeal.  

6. Failing to Adapt to Changing Finances 

Life is unpredictable, and your financial situation can change. Be prepared to adjust your budget and financial plans as needed. 

We know that homeownership offers many benefits, but it also comes with ongoing costs and potential financial challenges. By understanding the ongoing expenses, managing debt wisely, and avoiding common pitfalls, you can enjoy the rewards of homeownership while maintaining your financial well-being. 

If you are struggling to maintain your monthly bills, there are debt relief options available- and you do not have to give up your home! Our Debt Relief Specialists are available by phone at 1-888-916-9551, or you can request a call back via our contact us page to learn more about programs available.  


1. What are the ongoing costs associated with homeownership? 

The ongoing costs of homeownership include monthly mortgage payments, property taxes, homeowners insurance, maintenance and repairs, utilities, and possibly homeowners association (HOA) or condo fees.

2. How can I manage my mortgage payments effectively? 

To manage mortgage payments effectively, consider whether a fixed or variable rate mortgage is right for you. With a fixed rate, payments remain the same throughout the term, making budgeting easier. For variable rates, stay updated on monthly rate changes and have a plan to adjust your budget if needed.

3. What should I know about property taxes as a homeowner? 

Property taxes vary by location and home value. Budget for them and be aware of payment plan options, such as paying monthly or yearly, to fit your budget.

4. Why is homeowners insurance important, and how can I manage its cost? 

Homeowners insurance protects your property from unexpected events. Premiums vary based on factors like location and coverage. Notify your provider of upgrades that may affect rates. Condo or townhouse owners may be required to have insurance before purchase.

5. What are some common pitfalls to avoid as a homeowner? 

Common pitfalls to avoid include not budgeting realistically, neglecting maintenance, skipping a home inspection before purchase, underestimating DIY project complexity, ignoring future resale value, and failing to adapt to changing finances.

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