Understanding the True Cost of Home Ownership
Have you been thinking about buying or building a new home? When you do, what factors are you taking into consideration?
When budgeting for a new home there are a number of factors that come into play: down payment, insurance, and property tax to name a few of the key players. These costs are all rolled into your mortgage rate and are affected by the down payment, your interest rate and the length of your loan. But what about beyond that? What does it cost when you’re actually living in the home?
We find that more often than not, most people fail to take into account their utility bills and ongoing maintenance for years to come. Taking these factors into consideration is what we call the “True Cost of Living” for your new home and should be factored in when budgeting for living in your home, not just purchasing it.
The science and technology that goes into building a Zero Energy Ready Home (ZERH) may slightly increase your purchase price, but reduces many other costs - mainly, the price of utilities and regular maintenance. To illustrate this concept we have created the graph below to show how a larger initial investment in your home can end up costing you less in the long run. Not to mention the health, comfort and sustainability benefits that come with building green.
We took the average costs of a 3,000 square feet, 4 bedroom, 3 bathroom home, and compared them with the same mortgage rates and accompanying factors. What we found is that with the significant reduction in energy and maintenance bills due to building a high performance home, approximately $140 is saved each month over a new construction home, built to code.
SOURCE: Mortgage costs based on a 30 year loan, at 4% interest, 20% down, 1.25% property tax, PMI .5% and home insurance of $1000/yr. https://www.mortgagecalculator.org/
SOURCE: Utilities numbers based off of HERS score averages of an average existing home (130), a typical new code home (100), and an average BrightLeaf home (35). With a baseline of $200 average monhtly bill for a typical new code home with a HERS score of 100. Each 1 point decrease in the HERS Index corresponds to a 1% reduction in energy consumption compared to the imaginary HERS Reference Home. A home with a HERS Index of 70 uses 30% less energy than a code-minimum home of the same size and shape.
SOURCE: **1% of the purchase price of your home should be set aside each year for ongoing maintenance. For example, if your home cost $300,000, you should budget $3,000 per year for maintenance. 1% for existing home. .5% for a typical new build home. .25% for a BrightLeaf home.