Consumption and Real Estate
Other bills associated with owning a home?
Question : Other bills associated with owning a home?
I realize I’ll be making a mortgage payment, but what else should I budget for (I live in Denver)? It’s a townhome, so there is an HOA and I’m not sure what all that covers. Is insurance mandatory?
denver home insurance
Best answer:
Answer by Idiot_Savante
Hi.
If you have a mortgage on your home, yes, insurance is mandatory — besides, you do not want to be without it.
Here are a few expenses:
Principle + interest (your monthly mortgage expense)
HOA
Utilities (water, electric + gas and trash, if applicable)
Taxes (generally paid as part of your monthly mortgage bill)
Insurance (ditto, generally paid as part of mortgage payment)
Depending on how much your down payment is, you may also have an additional fee called Principle Mortgage Insurance (PMI). This is a monthly “penalty” fee that is basically insurance that you won’t default on your loan. A way around paying that is to have two mortgages (a primary and secondary) or to make a larger down payment.
Finally, what your HOA covers depends on your facility and management company. But, in general, it covers the maintenance and usage of all common areas (e.g. landscaping, any shared hallways, exterior surfaces, etc.). In general, it will not cover the cost of maintaining the inside of your home (e.g. plumbing blockages, broken windows, air filters, etc.).
HTH!
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#2 written by Ronna 1 year ago
If you are going to have a mortgage, then yes, you will be required to cover insurance for the replacement amount of the home. You will also have to pay property taxes as well. Both insurance and taxes can be handled in an escrow account and included into your monthly payment. Your mortgage company will go over all of that with you and explain any additional fees after you are approved for your loan. Congrats and good luck! R
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When living in a townhome or a condo many times included in your HOA dues will be a master insurance policy for the exterior of the home. You will simply only have to insure the inside of the home (the contents) which is much cheaper than regular homeowners insurance on a single family home. Your homeowners dues should cover exterior maintenance, snow removal (if applicable), landscaping, lawn care, master homeowners insurance policy (most likely), and possibly some of your utilities. The more you pay for your homeowners association fees, the more you should receive. I have even heard of some HOA fees covering water, gas, electric, sewage, garbage pickup and/or cable. However, the monthly dues were extremely high compared to the “norm.”
The first thing I recommend doing is to contact your soon to be HOA and ask them exactly what is included with your HOA dues. This will get you started. Then I would contact every company that you will have to pay monthly that is not paid for with your HOA dues, the gas company, electric company, water company, garbage pickup company, cable company and finding out what the average rates have been on that residence over the past year or so. They will be able to give you averages of what you could expect to pay. Obviously, everyone heats and cools, and uses water differently than everyone else so there will be some difference, but it will give you a rough estimate of what to expect to pay each month for all of these items.
Finally contact your insurance agent or shop around for insurance and get quotes for your homeowners insurance. Make sure you know exactly what type of insurance is required for your property and you understand if your HOA dues cover the structure of your property. Congratulations and best of luck to owning your own property.