Mortgage payments are just the beginning. Here’s what the home ownership actually costs

The cost of owning a home is increasing and not just because of High mortgage and increased home prices. Other housing fees and expenses are caught by housing owners.

Many household budgets for gradual repayment of the amount they borrowed on a housing loan (principal) and monthly interestS Still, they are not always reported about things like property taxes and late in the process. “This can derail financial plans by forcing difficult solutions such as stretching budgets too thin or move away from the home of dreams,” says Travis Hodges, managing director of VIU by hubDigital insurance platform.

In recent years, Outbreak of home insurance premiums and rising property Tax They added thousands of dollars to mortgage payments, pushing them beyond accessibility. In the meantime utility Along with increased daily health care, children, education and entertainment.

Even if you can afford the initial cost of buying a home, it is important to understand the daily price of home ownership.

Watch this: The hidden cost of owning a home explained

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Why is home property more expensive these days?

As of 2020, the average cost of owning a home has Ballooned with 26%Far exceeding the growth of wages for the same period. The average homeowner spends over $ 20,000 to own and maintain a home each year, and this is at the top of regular mortgage payments.

Property taxes, insurance premiums and maintenance costs are the three main factors that make the ownership of the homes more expensive today, and they do not show signs of a conversion course.

Taxes on property

In recent years, housing values ​​have risen, which means that millions of homeowners have noticed a stunning increase in their property tax. In 2024, the average American household paid for $ 3,018 With annual ownership taxes, which is 27.4% since 2019.

How much you pay depends on the local tax rate and the valued value of your property. The tax rates vary depending on the state and the county and are usually re -evaluated from every one to five years or when the property changes hands.

Increasing property tax can eventually be offset by Increasing equityS Yet this can only happen if you decide to sell your home, Refinancing his mortgage or touch this capital with a Equity loan or Home Capital Credit LineS Until then, increasing ownership taxes may be a sudden financial burden on your monthly budget.

Housing owners insurance

Since the beginning of 2020, the average monthly insurance payment has increased by 52%, with some households in higher-risk areas face a 90% increase in the same period, according to Intercontinental exchangeS The increasing insurance premiums are partially due to the cost of inflation and construction, as well as the increasing risks of Hurricanes, fires, tornado and other destructive events.

The amount you will pay depends on various factors, including the location of your property, age and square footage and your chosen policy.

Annual insurance costs in low-risk countries such as Hawaii or Vermont are about $ 500 to $ 800, significantly lower than Average national level of $ 2258S But with the Hurricane Florida predisposed, the average annual premium is about $ 5,488, with a monthly cost of approximately $ 457.

The choice to pass without insurance coverage can be a devastating burden for homeowners who are recovering from a great loss. In recent years, increasingly large number of private insurers have Sliced ​​coating in high -risk areasS The state farm, for example, dropped 69% of policies in Pacific Palisades in California only months before devastating wild fires pierced through the area, leaving families with the enormous financial burden of repairing or restoring their homes.

“No coverage, even any unforeseen event, whether damage to storm, fire or other expensive incident, could affect the financial stability of the family,” Hodges said.

Maintenance and repair

In general, you can expect to spend about 2% of the value of your home for maintenance and repair every year. A house of $ 400,000 will add up to $ 8,000 a year.

However, this number has increased significantly due to years of high inflation, increasing the cost of materials, appliances and labor. In 2024, the average household spent average $ 12,050Compared to $ 8,485 in 2017, according to Angi’s recent report, a home service website.

The same study also found that 50% of homeowners had surprising costs by adding tension to already strict budgets. Extreme meteorological events, such as fires, floods and tornado, are increasingly pain for homeowners.

For example, average fire damage The Recovery Price is $ 27,175S Depending on the size of your home and the scope of damage, prices can range from $ 800 to $ 180,000. If you live in an area where you have lost or abandon their insurance coverage, this number will be even more large.

Other expenses related to home ownership

In addition to property taxes and insurance payments, you will need to budget for these expenses when purchasing a home:

Final cost: Final cost are a neglected set of expenses you will have to pay when you buy a home. They are usually paid in advance, but can also be converted to your mortgage balance, with a “mortgage without removing costs” (if offered by your creditor). Depending on your location, closing costs may be expensive, ranging from 1% to 6% of the purchase price. These expenses include an estimate of the home, transfer of property, real estate taxes upon transfer of property, property insurance for the new owner (you), ownership insurance for the creditor and origin fees.

Private mortgage insurance: If you buy a home with an advance payment below 20%, you may need to include private mortgage insurance in your monthly payment. Lenders tend to consider borrowers who make lower payments as a higher risk candidates for mortgages, and the PMI requirements protect the creditor in case of failure. PMI borrowers usually spend between 0.5% and 1.5% From their amount of loan each year or between $ 30 and $ 70 a month for $ 100,000.

Utility accounts: Utilities costs have rapidly increased due to inflation. Your exact account will depend on several factors, including the time of year, your monthly use and the location and size of your house. In 2024, the average monthly utility services in the United States ranged from $ 500 to $ 600S

Hoa taxi: When you buy a house in a community with an association of homeowners, you become a member and you will have to pay current quarterly or monthly fees for HOA to cover the maintenance and maintenance of shared areas such as sidewalks. Hoa fees may vary between $ 100 and $ 1,000 a monthDepending on where you live.

Internal and external costs: Emergency maintenance or emergency repairs are difficult to predict, but there are also fees related to current superstructures and aesthetic maintenance.

• The paint of work
• Roof repair
• Deck, courtyard or maintenance of the pool
• Floor refining
• Insulation
• Electric and water maintenance or repair
• Removal of mold and/or termites
• Heating, ventilation and maintenance/installation of air conditioning
• Border for garden and trees
• Pest control
• Security system
• Window coverings and lighting
• Removal of leaves and/or snow

How does your loan period affect your monthly mortgage payment

Thehe Length of your home loan It plays a role in your interest rate and a monthly mortgage payment. Final loans usually have lower interest rates, but higher monthly payments because you pay it for a shorter period. Long-term loans benefit from lower monthly payments, but over time you will pay more interest.

Even if you have a fixed rate loan, your payments can still hesitate. This is because creditors usually associate the insurance of your homeowners and ownership taxes, which are variable costs, in payment.

How your advance payment affects your monthly mortgage payment

Higher advance payment It means that you will borrow less money, which will reduce your monthly mortgage payment and help you save interest in the long run. The higher advance payment also means that you will receive a better interest rate, as creditors usually offer the lowest interest rates to less risky borrowers. If you make a less advance paymentYou will probably have to pay a premium for private mortgage insurance To help compensate for the extra risk your creditor takes.

Home Purchase Tips in 2025

Once you are confident that you want to buy a home, start studying home prices trends. Do not rush to watch homes or talk to a Real estate agent Quite.

In addition to your maximum savings and creating a budget to buy a home, here are some additional steps to make sure you put yourself in a good deal.

• Get your loan in shape: Check your credit report and think about the ways you can work to increase your score in the next six to 12 months. If you carry a lot of debt on your credit cards, focus on paying them down to improve your result.
• Seek help with advance payment: If you are a borrower with low or moderate incomes, you may be able to qualify for help from your state or local residential body. The coupons for the first time can also examine options that can Make the process more affordableS
• Lock your percentage: Interest rates move constantly up and down. The lender can offer you 6.5% on a 30-year-old mortgage today, but this deal can turn 7% next week. If you see a speed that looks particularly attractive, lock it so it doesn’t slip away.