In June 2019, Ver Starr and his fiancee Jenelle Yee closed on a $599,000 3-bed, 2.5-bath townhome in Gardena, California, making them homeowners for the first time.
"I calculated how much rental money we'd paid over the last four years that we lived together and it was upwards of six figures," Starr tells CNBC Make It of the decision to buy. "That just didn't sit easy with me."
They saved enough to put $60,000 down and secured a 30-year fixed rate loan at 4.125%. Their monthly mortgage payment, including interest, is $2,663. But thanks to hidden costs, their total housing expenses run $3,851 a month — an extra $1,188. Here's exactly where that money goes:
Other costs they may have to deal with as homeowners include any future renovations, maintenance or repairs that arise.
"When you're a homeowner, you don't have a landlord or a property manager to submit a work form or get a new fridge," says Starr. "You have to take care of it yourself. If you have bug problems, that's on you. If something breaks or if you have a leak, that's on you."
Besides recurring expenses, the couple also paid $8,462 in upfront costs, excluding the $60,000 down payment. Here are all of the other expenses they owed before moving into their new home:
While Starr and Yee pay more today than what they used to pay in rent, they agree that it's worth it. "We're building our equity in something that we own," Starr says.
Plus, their townhome is an upgrade from their previous 2-bedroom apartment and a space where they plan to live when they start a family. "We really like being out of that rent cycle and not having to feel stressed out every year when the rate of rent increases," he adds.
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