The Average Monthly Cost of Owning a Home

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    A Breakdown of Costs

    • Owning a home typically entails the following monthly costs: mortgage interest and principal, hazard insurance, property tax and maintenance. Of these, maintenance is the big wildcard. If you buy a new home, presumably your maintenance costs should be near zero for many years, but you never know. If you buy an older home with outdated heating, cooling, electrical and plumbing systems, or an older roof, it could be very high. When you estimate monthly maintenance costs, keep the condition and age of your property in mind. A rough estimate for a new home might be $100 a month; for an older home, perhaps $300.

    Mortgage

    • Mortgage payments usually are the biggest factor in affecting the monthly cost of owning a home. Your monthly mortgage payment is dependent on the loan amount and interest rate. The average home price in the United States was $159,000 in early 2011, down from almost $200,000 in 2008. Ranges vary widely in different regions, from highs near $600,000 in places like Hawaii to lows like $64,000 in Lansing, Michigan. Assuming a 20 percent down payment on a $159,000 home, your loan amount would be about $137,000. Assuming a 30 year fixed rate loan at a 4.5 percent interest, which has been about the average rate in the first half of 2011, your monthly mortgage payment would be $694/month. This includes both interest and principal.

    Property Tax

    • Every state imposes property tax. A property tax is determined by multiplying the assessed value of the property, or some portion of it, by a tax rate. Rates run from a low of $1.72 for each $1,000 in value in Louisiana to $18.20 in Wisconsin. If your assessed value was $159,000 and you lived in Minnesota, where the tax rate is $8.14 -- about average nationally -- for each $1,000 in value, your annual property tax bill would be about $1,294 or $129/month.

    Insurance

    • Your mortgage lender is going to require you to obtain insurance on the property. Even if it didn't, it is important to protect your investment by maintaining adequate insurance. In many parts of the country this means having a policy to protect you from things like fire, theft and lawsuits. In some parts of the country you'll need special coverage for things like earthquakes and floods. Insurance rates vary regionally and with the type and cost of home construction. An average range for insurance is about .3 to 1 percent of the loan value. At .6 percent of a $137,000 loan, insurance would run $822/year or $59/month.

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