Homeownership is even more expensive than you think - Business Insider

Welcome to Personal Finance Insider, a biweekly newsletter that connects you with the stories, strategies, and tips you need to be better with money.

Street view of a row of houses with dollar signs on graph paper background

Here's what: Homeownership is nightmarishly expensive

I bought a house back in December 2020, and I got lucky: My three-bedroom Philadelphia rowhome cost a very meager $210,000, and I even got my seller to agree to write a $10,000 check to the electrical company to redo all the wiring in my house. So, yeah, very lucky.

I was also pretty well prepared for the costs of homeownership — I had savings set aside for repairs and new furniture, and I knew there was more to buying a home than just the down payment and closing costs. But I don't think I could have prepared myself for exactly how expensive homeownership has been thus far.

In my roughly seven months in this house, I've spent over $11,000 on repairs alone.

A few highlights:

New roofing and repairs to the masonry on the front of the house: $3,450
Emergency vinyl siding installation to repair a leak in the kitchen: $2,500
Brand new waste pipe: $1,377
HVAC service and repairs: $545

The list goes on. The point is — this place is costing me a fortune. But there were a few things I did before buying the house that have kept me from stress-eating my own hair.

First of all, I bought less house than I could afford. I went from paying $2,000 a month in rent in Los Angeles to just over $1,200 a month for my mortgage, and those savings have helped me cover all my planned (and unexpected) costs.

I also had a few thousand dollars saved for necessary home stuff (like planned repairs), and I had a full emergency fund to cover me in the event of, well, an emergency.

And, finally, I automatically save $200 every month in a "house fund" in my high-yield savings account. Financial planners recommend saving between 1 and 4% of the value of your home each year to cover repairs, and I'm right in that range. This automatic savings means I always have a pot of money to spend on my house, no matter what's going on with the rest of my budget.

So, the moral of the story: Planning is absolutely key to homeownership, and you'll need more money than you think. Costs aside, though, I definitely sleep better at night knowing I own my house and a landlord can't jack up the rent or kick me out at a moment's notice.

—Stephanie Hallett, senior editor of Personal Finance Insider and Certified Educator in Personal Finance

Peek inside the budgets & bank accounts of real people

Check out Refinery29's Money Diaries, where regular people share how they spend their hard-earned cash during a seven-day period — and track every last dollar.

Sign up for the free Money Diaries email newsletter »

Ad: Easy solution to help with costly home expenses

Refinancing your monthly mortgage payments at a historically low rate can be an easy way to save money and make sure you're able to cover those "nightmarishly expensive" home repairs. In July's refi market, lenders are aggressively competing with each other, and it's in every homeowner's best interest (unless you just refinanced) to at least receive quotes to see how much lower your new monthly payment could be. Review this list of top-ranked refinance companies and start seeing how much you can save »

Disclaimer: Money.com is an Insider affiliate partner. We may earn money when you use our links. Learn more.