The Hidden Costs of Buying a Bigger House
One of our primary motivations in building tiny was to save money so that we could better spend our time and energy doing the things we love. The differences in cost between large and tiny houses are obvious, but this infographic breaks down the hidden costs of buying a bigger house in a super clear way, creating an even more compelling reason to consider going small rather than big in real estate choices. Here is an introduction by the infographic’s author, Anastasia:
One of the prime reasons to make the jump to tiny home living, as you already know, is the cost savings when compared to buying a bigger home. These costs add up over time and make a significant impact if your financial goals include being debt-free or having financial freedom.
It turns that buying a big house might be even more expensive than you realize. Most home-buyers consider the upfront additional costs to purchasing a big home, such as the deposit or mortgage, but may forget the significance of the on-going costs over the life of the home. A bigger home means higher energy costs, maintenance costs and property taxes. Think of taking each of those bills and, rather than sending that money off in the mail, putting it towards your savings for the future, travel, or whatever else you would enjoy doing with financial freedom.
It is estimated that over the life a 30-year mortgage, each additional 500 square feet of home will cost $120,574. These additional costs include closing costs, furnishings, mortgage interest, energy costs, property taxes and initial purchase costs. This is a significant amount of money that could be used to pay off debt or add to retirement savings. When thinking of the long term effects of owning a larger home, the financial impact is impossible to ignore.
To see a further breakdown of the hidden costs of owning a bigger home, check out this infographic, which is a great breakdown of all the upfront and ongoing costs of a bigger home.
AVERAGE ONE-TIME COSTS WHEN BUYING A NEW HOUSE
Purchase price of a average new house: $84/sq ft
Closing costs: 3.5% of the home price
Costs to fully furnish a new home: 20% of the home price
AVERAGE ANNUAL COSTS OF HOME OWNERSHIP
Energy costs: $1.03/sq ft
Maintenance: 1% of the home price
Property taxes: 1.3% of the home price
Over a 30 year mortgage, each additional 500 square feet of space will cost you an extra-
$42,000 in initial purchase costs
$1,470 in closing costs
$8,400 in furnishing
$24,148 in mortgage interest
$16,506 in property taxes
$15, 450 in energy costs
$12,600 in maintenance
HOW MUCH THAT BIGGER HOME WILL REALLY COST YOU OVER 30 YEARS ASSUMING YOU HAVE A 30-YEAR MORTGAGE AT 4%
A 1000 sq ft house will cost you an extra $241,148
A 1500 sq ft house will cost you an extra $361,722
A 2000 sq ft house will cost you an extra $482,297
A 2500 sq ft house will cost you an extra $602,871