SPEAKER:
So, you know that movie where you buy the house and everything goes wrong? That was this house. But I'll tell you what, making it a sanctuary was worth every surprise along the way.
Most people save for the big expenses, the down payment, the mortgage, but buying a home is kind of like realizing that each room has its own set of expenses to think through along the way. But what does buying a home actually cost beyond the mortgage?
I never thought I'd be able to own a home. You know, I was homeless for a while. I lived in my car. I grew up pretty poor. Buying a home really wasn't in the cards for me. But when the opportunity finally came through, I had to figure it out. I had to figure out a lot. And I had to figure it out by asking around.
About half of first-time buyers don't fully understand the true cost of homeownership before purchasing. And I was definitely one of those people. But here's what I've learned. The numbers are a lot less scary when you actually understand them, right? So, let's walk through it room by room, and we'll run the numbers on a home priced around the national median.
Every home has its entryway, and in this one, it's the closing costs. Closing costs are all the fees it takes to legally transfer a home from one person to another.
I remember when I bought my first home, I heard the term closing costs and honestly thought, I mean, how much could it be? A hundred bucks? And then I saw the number and I was like, uh, wait, that is a significant amount of money that I was not expecting. But the good news is there are a lot of ways to bring those costs down. You can ask a seller to cover a portion. You can look into loan programs that offer credits, but you can only do those things if you know what's coming.
So, we're in the living room 'cause you got to live somewhere, right? And that means property taxes. And I see these catch people the most.
And look at the history of a house. You see $1,200 a year for property taxes. I can handle that. But that's more than likely based on what Marlene was paying, sometimes decades ago. And depending on where you live, that number could change significantly once the home is yours. So, it's one of the most important things you should research for your specific state. In 2024, the average amount of annual property taxes was around $5,000. It's not nothing, but you can prepare for it.
Home maintenance costs have a funny way of showing up when you least expect them. And sometimes it starts somewhere as simple as the bathroom or, in my case, what was running underneath it. A few years ago, a sewer line had been leaking for so long, it actually washed away some of the foundation. I mean, the bathroom door wouldn't even open because the tile had shifted so much. But we reinforced the foundation, and the house has been stable ever since.
Another thing I didn't see coming is often in Spanish-style construction, they use chicken wire to hold the stucco together. And of course, chicken wire is made of metal and blocks Wi-Fi signals. So, we had to run Ethernet cables to the whole house just to get Wi-Fi.
So, a good rule of thumb is to budget 1% of your home's value every year for maintenance. I mean, think of it as your safety net in case something goes wrong. And if you don't spend it, you can use it on something fun like your next reno project.
Beyond the mortgage, what does a home actually cost? Here is a rough recap. So, closing costs are around $12,000 as a one-time fee. You've got your property taxes around $355 a month, and your maintenance reserve, so you never get caught off guard, is around the same.
Now, those numbers will shift depending on where you live and what you pay for your home. And they don't cover everything like insurance, utilities, the surprises hiding in the walls. But as a baseline, it's a solid number to build your plan around.
So, when I was growing up, the average age for buying a first home was in your early 20s. Now, though, it's closer to 40. That's not a personal failure. It's reality of the market. And that's why I'm glad Progressive's Open the House initiative exists. It's built to help first-time buyers understand their options and the resources available to them to move forward with confidence so that by the time you get the keys, you've already got a plan.
And as part of that, they're offering down payment assistance through their Up Payment program for eligible first-time homebuyers.
So, do it on your own timeline. Don't let anybody tell you when you're supposed to buy a home. Do it when you actually have the cushion and when you've got the knowledge, when you are prepared.
