The hidden costs of homeownership

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One of the biggest fears of home buyers is the unpredictability in home-related costs, whether it’s a necessary large repair or a bunch of smaller unexpected costs.

Property tax increases can be one of the largest unexpected costs. Imagine this, you qualify for a 30-year-fixed mortgage, and along with that you set up an escrow account with the lender so you will not have to worry about the tax bill when it’s due to the county twice a year. One day you receive a letter from your bank informing you the mortgage payment will be going up due to an increase in your tax bill.

If you are looking at properties that belong to a homeowners association, take a look at its budget and reserve amounts. You also should review the minutes from the board member meetings. These minutes will give you a good idea if an increase might be proposed or needed in the near future. This can happen for many different reasons, from an increase of bills to a shortage of funds due to members not paying their dues. This is important to keep in mind. Since the start of the recession, one out of every eight members has defaulted on their association dues, passing the burden onto other unit owners and members.

One cost that may not be predictable during the home-buying process is utilities. Gas, water and electric can sometimes be easily forgotten when your landlord is paying the bills, but with homeownership also comes the ownership of these costs, along with many other bills on a monthly basis. When it comes to utility bills, your best option is to request a 12-month history from the sellers. This will give you an idea of their range so that you will be able to budget accordingly.

One of the most overlooked costs of homeownership can be a special assessment. A special assessment is a bill that is divided by property owners within an area in order to cover the costs incurred for public repairs, such as street lighting or street repaving. Be careful when purchasing a home since this is not always noticed by simply looking at the tax bill. Many times this is sent out to residents in a bill format monthly or even annually. Another type of special assessment can be imposed by a homeowners association, which is then used to cover the costs of major repairs when the association does not have the funds to pay for it, such as a new roof or parking lot repaving.

Lastly, many times a new homeowner will gut a property down to the studs and remodel it after purchasing it, including replacing appliances and mechanicals. Even though the home is now brand new, every season change could bring additional unexpected expenses. Whether it’s something major like a broken pipe or something as simple as having your windows cleaned, costs will surface.

The simple fact of homeownership is that it will cost you. Budget a little extra every month and put it to the side. Being prepared and having the funds available for any increases or unexpected costs will ease the pain of having to pay for it. It’s a far preferable scenario to scrounging for funds when that bill arrives.

For more, call 847-292-4700, e-mail or visit

About Giuseppe Zerillo

Giuseppe Zerillo is the managing broker and owner of Zerillo Realty Inc. He is active on many boards, serving as village trustee of Harwood Heights and corporate secretary for Casa Italia. In 2011, he received the IANU Foundation's 2011 David Award for outstanding promise in the field of real estate, and in 2012 he was honored by the Illinois State Crime Commission for his community outreach. Constantly seeking opportunities to give back, he donates to several charities and raises money for children with disabilities.

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