Here's How I'm Getting Into a 'Homeowner Mindset' -- Even Though I'm Still Renting

I've been a renter for nearly all of my adult life, and as a result, I've gotten very comfortable with having minimal housing expenses. When I sign a lease on a new place, I pay a deposit (that I often get back when I move out) alongside the first month's rent. I then pay rent every month, and I also spend a little for renters insurance (a landlord's homeowners insurance policy will not cover my belongings).

I occasionally pay for minor repairs and maintenance issues, but not often, and this has varied depending on where I lived and whether I had a landlord who was responsive to requests for repairs.

Homeowners are responsible for a lot more expenses than renters are. According to research from The Ascent, in 2019, homeowners with a mortgage paid $8,609 more than renters did for housing costs. I'm gearing up to buy a home again soon myself, despite the extra costs homeownership entails. Thankfully, the process of getting ready to apply for a mortgage loan is giving me a taste of the "homeowner mindset."

I expect my housing costs to double

I live in a fairly inexpensive small city, which means my rent is a lot less than it would be if I lived in a big city like New York or Los Angeles. Right now, I spend about $1,000 a month on my housing expenses (rent and renters insurance). To see what I might be paying for housing after I buy, I turned to The Ascent's mortgage calculator.

Based on the average rate on a 30-year fixed-rate mortgage of 6.81% (per Freddie Mac) as of this writing, a 10% down payment on a typical home in my area/price range, and realistic estimates of what I'll pay for property taxes, homeowners insurance, and private mortgage insurance (PMI), I came up with a figure of $1,831 per month. That's not quite double my current costs, but I'm also planning to put money into an emergency fund every month to give myself a financial cushion for repairs and maintenance costs. All in, $2,000 a month total is a solid estimate for me as a homeowner.

I can't say for certain yet how much my total costs will be, but these are realistic figures based on the information I have now. I made this calculation using a homeowners insurance premium of $1,000 per year. I found numbers for this cost ranging from $600 to $1,400 per year in my city, so $1,000 feels like a safe estimate for what will most likely be a small, older home. My property tax figure was $4,000 per year, which is another educated guess based on discussions with friends who live locally and numbers in real estate listings in my city. I left off HOA costs, because homeowners associations aren't common in my area -- and I wouldn't buy in an HOA anyway.

I can make a reasonable guess at the price for my eventual home based on home listings in my area, and it's likely that I'll have to pay for PMI because my down payment will most likely be 10% instead of 20%. I don't want to tie up all my available cash in my mortgage, as I'd prefer to avoid going into debt when something inevitably breaks after I move in. My mortgage rate could be lower than the average, though, as my FICO® Score is in the "exceptional" range. Ultimately, it's hard to say for sure what a house will cost me at this point.

I am actively saving money for a home

Luckily, I'm already getting experience with the costs of homeownership. Ever since I finished getting out of debt last fall, I've been pumping a few thousand dollars a month into a high-yield savings account. As a result, I'm familiar with the impact that buying a house will have on my finances.

While I'm no stranger to budgeting more money for housing costs, I'm sure other aspects of homeownership will feel new to me -- such as the first time I have to seek out a plumber myself for a leak or find an HVAC technician to service my furnace, rather than just calling or texting a landlord.

Buying and owning a home sure isn't cheap, but I'm glad that I'm getting to test drive a new budget for housing costs in the process of saving up to buy. If you're hoping to buy a house yourself, it's worth living with your projected housing costs for a while first. You can put the extra money into a savings account so it'll grow with interest and be kept safe until it's time to apply for mortgage pre-approval.