Unexpected expenses and costs are scary. This makes it the perfect topic for today on Halloween Sunday.
I want to alert you of hidden charges and costs that could substantially increase your monthly payments when you buy a new house.
When real estate websites show the monthly cost of homes, they refer to principal and interest (P&I) on a 30-year mortgage.
For an average home worth $350,000 your monthly P&I is around $1,350 at today’s interest rates (3.5%).
That’s only part of the expenses you will incur. Here’s a list of additional fees you may have to pay …
Taxes and Insurance
Most lenders set up an escrow for property taxes and homeowners insurance. These add a fixed fee to your monthly P&I payments.
In Dublin, property taxes will cost you $8,000 per year on a $350,000 house. Homeowners insurance will be around $1,200.
So, taxes and insurance will increase your monthly payment by $767.
Association Fees
Many suburban neighborhoods have homeowners associations (HOAs). They charge annual fees for maintaining the common areas, including the landscaping. HOAs can cost you anywhere from $200 to $1,000 a year.
Condominium associations are more expensive. They often cover snow plowing, lawn mowing, a clubhouse with swimming pool, possibly water, sewer, and internet. Here we are talking about $250 to $500 a month.
In new developments you may have to pay for both associations at a total price tag of $600 a month (or more).
Community Development Charges
Community Development (CD) fees are often charged by new subdivisions to pay for roads, sidewalks, sanitary sewer, playgrounds, ponds, pools, and any amenities offered to residents in the neighborhood.
Let’s take Jerome Village as an example. Their annual fees are:
- $332.50/$100K value to fund the Community Development Authority
- $394 to cover the cost of operating the community center and pools
- $330 for maintaining the common areas and trails
Total cost for a $350,000 home: $1,888 per year or $157 a month.
In addition, the bylaws allow Jerome Village to impose a 2% tax on your income if more funds are needed in the future. Now that’s really scary!
School Income Taxes
Some rural school districts charge residents a School Income Tax of 1% to 2% to supplement revenues from property taxes.
You can find a list of school income tax areas and rates at the Ohio Department of Taxation website.
The Costs Add Up …
All together, these costs and fees could accumulate to an extra $1,500 a month, more than doubling your monthly mortgage payment.
This does not include the 2% income tax charged by some communities or school districts.
That’s scary!
If the prospect of these “hidden” fees worries you, I can help. I will alert you to all the charges you should expect when you buy or build a new home.
Give me a call NOW!
This is the best time of the year to buy with less competition, no bidding wars, and more flexible sellers!
Call or Text me NOW at (614) 975-9650! Click the image below to watch the full video article!
