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What's It Cost? Homeownership Expenses Beyond Your Mortgage

Cher Revolinski

Your go-to real estate professional for Parker Colorado and the surrounding South Metro Denver area...

Your go-to real estate professional for Parker Colorado and the surrounding South Metro Denver area...

Jan 26 9 minutes read

What Costs are Included in Home Ownership?

Embarking on the journey of homeownership is a cherished American dream, especially in the scenic and vibrant Denver, Colorado area. However, navigating the landscape of real estate in Denver, from picturesque Parker to the convenience of Highlands Ranch or the luxury homes in Greenwood Village, involves more than just assessing mortgage affordability. The true cost of owning a home in these sought-after Southeast metro areas extends beyond monthly mortgage payments. This comprehensive guide is tailored for both potential home buyers and seasoned sellers in Denver's real estate market. It delves into the often-overlooked expenses of homeownership, providing valuable insights into the costs that accompany the joy of owning a home in Colorado's enchanting communities. Whether you're eyeing a cozy property in Castle Rock, a spacious acreage in Elizabeth, or a custom-built luxury home in Lone Tree, understanding these additional expenses is crucial. Our goal is to help you budget effectively, plan meticulously, and decide if now is the opportune moment for you to step into homeownership or upgrade your current living situation. Let's explore the hidden costs that come with owning a piece of Denver's real estate paradise and how they impact your homeownership journey.

1. Property Taxes Affordability

Property taxes are a significant ongoing expense for homeowners—and as the value of your home rises, so too can the amount of tax you owe. This is because the amount varies depending on the assessed value of your property and local tax rates. And here across the Denver Metro area, we all saw a significant bump in property taxes for this year.  Some as much as 40-50%.  If you're on a fixed income, this can be a big hit!  Taxes follow along with assessed value and since our home values increased in Denver by over 40% on average, the counties are wanting their piece of the pie. Property taxes are typically rolled into monthly mortgage payments (this is part of your "escrow" payment each month that collects and pays taxes and home insurance) so you can avoid paying one large lump sum. Check with your lender or take a look at your mortgage bill if you’re not sure if this is the case for you.

2. Home Insurance

Besides being your home, your property is an investment, and protecting it is key. You do that by purchasing home insurance, which covers damages to your property and its contents. If you’re paying for a mortgage, home insurance will be required by your lender. If your home is paid off, carrying home insurance is still a good idea to protect it against unforeseen circumstances. Shop around for the best rates and coverage to ensure you have adequate protection without overpaying.

3. Utilities

Owning a home means you'll be responsible for all the utility bills such as water, sewer, electricity, gas, trash removal, and internet. The costs of these services vary based on the size and location of your home as well as your household’s usage patterns. Some HOAs pay for water, trash, etc. so this can be a benefit.  But of course, you're paying the monthly HOA fees so it's not exactly "free"!  In any case, taking steps to conserve energy and water can help keep these bills in check.

4. Maintenance and Repairs

Homes require regular upkeep to stay in good condition and maintain their value. This includes tasks like landscaping, gutter cleaning, painting, inspections of major systems, and more. Hiring a professional to do these tasks will often produce better results—but even if you’re an avid DIY’er, you’ll need to factor the cost of tools and supplies and your time into your budget.

Additionally, the need for unexpected repairs can arise, such as a leaky roof, malfunctioning appliance, or a burst pipe. Building a reserve fund for these unforeseen expenses is a wise financial move that will help prevent extreme stress on you and your budget.  And don't forget, if something goes wrong or if you are planning an improvement, you can always contact me if you need advice or a referral to a great vendor. 

5. Homeowner's Association (HOA) Fees

If your property is part of an HOA, you'll likely have monthly or annual fees. These fees vary widely and can add hundreds of dollars to your monthly cost of homeownership—so make sure you’re fully aware of them before you purchase a property. These fees are listed as part of the information provided by a Realtor when you're searching for a home. So if you're trying to stick to a monthly expense for your home, be sure to factor in the costs of the HOA as it may reduce the price you can spend on the home.  The HOA fees are also detailed in your contract before you purchase a home, including the monthly or yearly cost, what the fees cover, and how much they can increase each year.

The upside is that the funds you pay to an HOA contribute to the maintenance of common areas and community amenities, which can greatly improve your home’s value and your quality of life.

6. Appliances and Furniture

While not a regular expense, you may need to replace or upgrade furniture and appliances at times. Having a fund for these occasional but significant costs ensures you're prepared when the time comes.

7. Home Improvement Projects

In the diverse and dynamic Denver real estate market, embarking on home improvement projects is not just a pursuit of personal satisfaction, but a strategic move to enhance property value. From the serene suburbs of Parker to the luxurious neighborhoods of Greenwood Village, homeowners frequently engage in various renovation projects to elevate their living spaces. Whether it's transforming a kitchen, adding an elegant outdoor deck, or updating a bathroom, these enhancements can significantly increase the appeal and market value of your home.

In the thriving rural communities like Elizabeth and Kiowa, where acreage properties offer vast potential for customization, improvements can range from landscaping upgrades to the addition of equestrian facilities, each uniquely reflecting the homeowner's lifestyle. We just replaced our old, worn-out barn with a brand new Morton barn and couldn't be happier. Reach out for any questions about this process.  And budgeting for these projects is a critical step. It involves a careful balance between your vision for the property and the practical aspects of financial planning. By allocating funds wisely, you can ensure that your home improvement endeavors not only bring joy and functionality to your living space but also contribute positively to your property's market standing in Denver's competitive real estate scene.

For sellers in the Denver area, well-considered improvements can be a powerful tool in attracting potential buyers. A remodeled kitchen or a newly added feature can be the defining factor that sets your property apart. For buyers, understanding the potential for future improvements can help in envisioning a space that truly feels like home, be it a charming ranch in Elizabeth or a custom-built luxury home in Castle Rock.

8. Home Security

Ensuring the safety of your home and family may involve investing in security systems, cameras, or smart home technology. While these expenses are optional, they contribute to peace of mind and the overall protection of your property.

In conclusion, the cost of homeownership involves more than just mortgage payments. Being aware of these additional expenses and planning accordingly can lead to a more secure and enjoyable homeownership experience. Take the time to assess your budget, plan for the long term, and make informed decisions to safeguard your investment.

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