More than Just Your Rate: Estimating the True Costs of Homeownership

Couple reviewing paperwork with Loan officer


Your mortgage rate is going to play a big role in what your monthly payment will look like. But is it the only thing you need to consider when buying a home?

Absolutely not.

Even if you qualify for the lowest rate on the books, there are still a whole slew of other costs to consider – costs that affect your monthly payment, as well as additional costs just for living in your new home on a daily, weekly, monthly and annual basis.

Want to make sure you’re not stuck emptying the bank account just to pay the bills? Here are all the costs to consider – before you sign those closing papers:

Your monthly payment.

This includes your principal payment and an interest payment. The total amount of your monthly payment will depend on the cost of your home, the balance on the loan you took out, your down payment and the interest rate you qualify for. Your monthly payment may also include mortgage insurance and, if you choose to escrow, a portion of your estimated property taxes as well.

Closing costs.

There are dozens of closing costs you’ll likely be responsible for before the home is yours, so make sure you’ve got enough saved to cover them – and then some. You’ll also need a few hundred bucks for a home inspection. Fortunately, these are just one-off expenses you’ll only owe on closing day.

Insurance and taxes.

Homeowner’s insurance is a must-have in case of natural disaster, theft or injury on your property. Consider using the same provider you have for car insurance, as they may cut you a deal for bundling your policies.


Water, trash and electricity are all something you’ll need to cover on a monthly basis for your home. Try to take into account the property’s square footage and age to estimate how hard it will be to cool or keep warm. Also, keep in mind that any gas-powered appliances or water heaters will add yet another monthly bill to the mix.

Maintenance and repairs.

No matter how new a property is, there are always going to be repairs to make along the way. Maybe it’s just fixing a doorknob or sealing up some grout, but you can count on at least a handful of repairs – even in the first year of owning the home. You’ll also need to cover the costs of maintaining the property, including mowing the lawn, cleaning the house, replacing air filters and keeping the home a safe and healthy environment.

There’s a lot more to a home’s price than just your rate or the number on its MLS listing. Make sure you have the full financial picture before putting in a bid and set yourself up for success from the start.

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Aly Yale

Aly J. Yale is a freelance writer focusing on real estate, mortgage, and the housing market. Her work has been featured in Forbes, Bankrate, The Motley Fool, Business Insider, The Balance, and more. Prior to freelancing, she served as an editor and reporter for The Dallas Morning News. She graduated from Texas Christian University's Bob Schieffer College of Communication with a major in radio-TV-film and news-editorial journalism. Connect with her at or on Twitter at @AlyJwriter.