11 Year Cost of Home ownership Update. Now With Paid Off Mortgage.

Are you in the market to buy that first home? Make sure you leave some room in your budget for the often overlooked maintenance costs that come with owning a home. It’s easy to overlook but don’t.

Once you sign those papers you are now officially on your own. No more landlords to fall back on for any problems or repairs.

Your emergency fund will become even more important than ever. Always maintain a healthy emergency fund to protect your assets and investments.

Don’t just account for your mortgage, property tax, utilities, and insurance.

Budget for the occasional water heater replacement, appliance repairs or replacement, plumbing repairs, roof repairs, exterior painting, termite treatment, and even the servicing of your central air conditioner.

Let’s take a look at how the cost of owning my home for the past 11 years has panned out.

Nothing lasts forever. Eventually, something will break and will need to be repaired, or even worse, be replaced. I’m a heavy DIY guy. I have done most of the plumbing, remodeling and electrical repairs which has saved me thousands. I began this year with having to make some roof repairs (DIY saving me upwards of $2,400) and had my exterior wood trim painted ($1,860). Keep in mind, those expenses are not accounted for in the chart above.

So, here is how you should go about calculating for that new home purchase.

Mortgage + Property Tax + Insurance + Utilities + (That extra $122.26!) = Real Cost.

That extra could account for more depending on how much you are willing to do the repairs yourself.

 

Cost of Ownership for 11 Years

This is one of my favorite charts. It may be a little confusing at first so let me explain.

The RED numbers on the blue line indicates the average monthly costs per month since purchase of the home after going F.I.R.E. (Financial Independence Retired Early).

The GREEN bars indicate the monthly cost per month for the year since paying off the mortgage.

Cost of ownership includes the following expenses:

• Mortgage
• Additional principal payments (Just a personal preference)
• Property tax
• Homeowner insurance
• Closing costs related to purchase and refi
• All costs related to remodeling, repairs, improvements, or modifications to the home
• Recurring maintenance costs: Landscaping
• Major appliances

Does not include:

• Utilities and living expenses
• Furniture
• Minor repairs

Mortgage Details & Highlights

• 2008: Mortgage P&I was $2,041.57.
• 2011: Refinancing brought my P&I down to $1,729.13.
• 2017: Mortgage paid off.
• Total Interest paid: $133,827.55
• Total Principal accrued: $48,003.72
• Total P&I: $181,831.27
• Additional Principal paid: $10,750 (No matter how tempting it was to add additional principal payments to the house, I remained disciplined with my plan to tackle the investment properties first.)

 

Conclusion

Knowing how much it really costs to own a single family home can be shocking to some. Being prepared and understanding what to expect is important.

One of the biggest financial mistakes I have seen close friends make is becoming house poor. A situation where nearly 50% of their earnings are tied to housing related expense. In which it leads to an anemic savings rate.

How awesome would it be if you can devise a plan where your housing expense only decline over time. Well, that is the game I played.

I think obsessing over the outcome can make it reality.

Tracking these numbers kept me aware and reminded me at all times where I stand. I am reminded of that saying, “knowing is half the battle”. It really is.

I plan to share this update once a year. I am curious to find out how low that long term monthly cost figure will drop over time. I’ll keep you posted. Thanks for reading! 😊