What Will My House Really Cost?
When shopping for houses, numbers can start to take over your brain–namely, those listing prices that flash across your search screen as you check for the latest updates. As important as those prices are to navigating your housing budget, it’s important to consider other costs that will end up impacting your payments. What other numbers do you need to know?
Property Tax
The property tax rate in Tiffin is around 4%, so the owner of a house listed around $100,000 with a tax assessment of around $27,000 would owe around $1,000 annually in property taxes (property taxes are based on a home’s appraised tax value). Many homeowners roll their property tax payments into an escrow account so that taxes are combined with their monthly housing payment.
Down Payment
The larger your down payment, of course, the less you have to pay off. A bigger down payment can make more of a difference than you think, as it reduces the amount of principal you have to pay off, which reduces your interest payments as well.
PMI
PMI, or Private Mortgage Insurance, may be an option to those borrowers who do not meet the down payment requirements for certain mortgage programs. PMI is usually around 1 to 2% of the outstanding loan. Most buyers pay their PMI insurance in monthly installments, escrowed with their housing payments, property tax, and homeowner's insurance.
Length of Loan
The longer the loan, the more you have to pay in interest, so it’s always worth it to compare different loan terms–10, 15, or 30-year–to see if you can pay your home off more quickly. An amortization schedule breaks down the life of your loan month by month, showing you how much of each payment goes toward the principal and how much goes toward interest. With the help of this schedule you can also see when your house will be paid off!
Homeowners Insurance
Most buyers are required to get homeowners insurance before obtaining a loan. Homeowners insurance protects against losses and damages resulting from fires, weather, or burglaries; it also covers legal costs if someone is injured on your property. (Earthquake and flood insurance are sold as separate policies.) According to Zillow.com, “in very broad terms, expect to pay about $35 per month for every $100,000 of home value, though it depends on your city and state.” These payments, like your property tax and PMI, if applicable, may be rolled into your monthly mortgage payment.
HOA Fees
Homeowners’ association fees are typically found in planned developments, such as condominium, townhouse, or gated communities. These fees, which can vary from $30 to several hundred dollars per month, are used to pay for lawn care, maintenance, and common areas enjoyed by the entire community, such as pools and clubhouses.
Ready to start shopping for your new home? Have more questions about monthly costs? Contact one of First National Bank of Sycamore’s loan officers to arrange for an appointment. We’re from here and can help you make smart decisions for your family’s future home.
