Experts warn homebuyers about the 'hidden costs' that can add up to an average of $18,000 per year.

• A recent report by Bankrate.com reveals that the average annual hidden costs of homeownership amount to $18,118, which equates to $1,510 per month.
• Jeff Ostrowski, an analyst at Bankrate.com, stated that it's crucial to comprehend that you're purchasing much more than just a mortgage payment when you buy a home.

The cost of maintaining a home in the U.S. has increased significantly, which may surprise some buyers.

A recent report by Bankrate.com reveals that the total annual "hidden costs" of homeownership amount to an average of $18,118, or $1,510 per month. This national figure encompasses expenses such as property taxes, homeowners insurance, electricity, internet, and cable bills, as well as home maintenance, which was estimated at 2% of a home's value annually.

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The cost of hidden expenses in a typical single-family home in the U.S. has increased by approximately 26% since 2016, according to a report. In 2020, these expenses amounted to $14,428 annually or $1,202 per month.

"Jeff Ostrowski, an analyst at Bankrate.com, emphasized that when purchasing a mortgage, it's crucial to recognize that you're not only paying for the monthly mortgage payment but also for the additional costs that you'll need to account for."

In April, the national median mortgage payment increased by 6.8% to $2,256, which is $144 more than the same month last year, as reported by the Mortgage Bankers Association.

Older homes can require more repairs

Experts say that maintenance and repair costs often surprise new homeowners more than other expenses because of the wide range of repair costs based on the age of the home.

The lack of new construction indicates that the homes being bought are older, as stated by Jessica Lautz, deputy chief economist at the National Association of Realtors.

Often, homebuyers must make compromises regarding the age or condition of the home, as stated by her.

As the supply of homes on the market grows, many of them were constructed decades ago, according to the 2022 American Community Survey by the U.S. Census Bureau. The survey revealed that the median age of owner-occupied homes in the U.S. is approximately 40 years old.

Consider upgrading the HVAC system, windows, or doors in a home that is around that age, as suggested by Lautz.

On average, a roof lasts around 30 years, while vinyl siding may last between three to four decades, according to Angi.com, a platform that connects homeowners with professional contractors for home maintenance or renovations.

"Suddenly, those costs can accumulate rapidly," Ostrowski remarked.

For first-timers, repairs are 'part of the learning process'

Becoming a homeowner involves learning about the true cost of maintenance and repairs, which first-time buyers often overlook.

After being a homeowner for some time, you come to realize all the potential problems that can arise.

Spending your entire savings for the down payment and becoming "house poor" is a mistake, according to Ostrowski.

After moving in, you lack funds for repairs and maintenance, leading to accumulation of credit card debt or higher interest debt.

In 2023, Angi.com reported that 46% of homeowners utilized cash from savings to finance home improvement projects, while 20% relied on credit cards, 7% refinanced an existing loan, and 5% utilized a home equity line of credit loan.

Don't waive a home inspection

Homebuyers on the market were more likely to waive home inspections due to high competition among other buyers, as stated by Ostrowski. Additionally, people who were already homeowners and could make cash offers were more likely to forgo a home inspection.

He stated that they were not as vulnerable as a first-time buyer or someone who had never gone through the process.

Competition is still hot in some areas.

According to Lautz, on average, three offers are made for every home listed for sale.

In April, the percentage of buyers who waived the home inspection decreased from 22% the previous month to 19%, which is also lower than the 21% recorded a year ago, according to NAR data.

An inspection is crucial to help you understand potential maintenance tasks and repairs before making a purchase.

Closing on a house can result in ongoing costs, according to Ostrowski.

"The risk of someone moving into a house without realizing that the air conditioning, water heater, or roof needs replacement increases," he stated.