The True Cost of Homeownership Is Higher Than You Think
Homeownership comes with a whole new set of costs and responsibilities you’ve probably never considered if you’ve rented your whole life.
Understanding the costs that go into the mortgage (above and beyond the principal and interest) are important.
Here is what you are paying for as part of that monthly payment.
Principal and Interest
Each month, you pay the interest on the balance of the loan plus a small piece of the principal. As the loan matures, you pay less in interest, and more in principal.
If you have a mortgage, your lender will force you to get insurance to cover at least the value of the loan.
Property taxes pay for things like schools, hospitals, and infrastructure. This one also varies wildly depending on what city and state you live in.
PMI (Private Mortgage Insurance)
PMI is insurance for the lender in case you default on the mortgage.
The Hidden Costs of Homeownership
What gets included in the mortgage payment is only scratching the surface of what it really costs to own a home.
Repairs and Maintenance
The general rule of thumb I see thrown around is
repairs and maintenance on your home will cost 1-2% of the home value per year
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