Bills to pay when owning a house
So when I first bought my house I didn't realize that there were other things that came along with the payment each month so aside from the mortgage-the money that the lender has loaned to you so that you can make this purchase-there's some other things that you're going to be paying each month.
Private mortgage insurance
For example, you'll have your mortgage and then on top of that you're going to have private mortgage insurance unless you put down 20% or more down on your house. But, for a lot of us we do because we didn't put down 20% or more, or, if you have screaming awesome credit. There was one point where I had an 804 credit score and I didn't have to pay private mortgage insurance because they looked at me as someone who is going to make sure that they paid their bills. That was nice because that saved me maybe one or two hundred dollars a month. I've seen PMI as high as $350 per month and so it can get pretty high. Your interest rate is higher when you're doing those down payment assistance programs and that can make the payment a little bit higher each month.
The next thing that I want to let you guys know that you'll be paying are taxes now in Colorado Springs taxes can range anywhere from several hundred to thousands of dollars per year. If you buy a townhouse, it could be as small as three or four hundred per year, all the way up to twenty four hundred dollars per year depending on certain areas such as Lorson Ranch. You can look this up on the county assessor records website here. The payment is basically the annual payment divided by 12 and that's what you're going to be paying each month (even though technically they get paid twice a year from escrow on your behalf-consult your tax professional).
So, if your taxes are $2,400 for the year, then you'll just divide that by 12 and that brings you to $200 a month in taxes which can be pretty high. When I first bought my house, taxes were only $800 for the year, but then we all voted to invest in our schools so now our taxes are almost twice that amount. Even when you do move in and you have a low tax rate, it can always go up! So, to be on the safe side, always expect your monthly payment to go up. However, you can write off as a homeowner at tax time so it'll wash most times! They will put that into escrow and then you'll be paying for taxes in arrears. So, the following year if you were behind or you didn't have enough money for your taxes, that's going to go on to your monthly mortgage for the following year.
Aside from taxes, you're going to have interest payments. Interest is going to be on top of your mortgage payment. Now, when you look at all of your mortgage payments that you're going to be paying over the course of 15 to 30 years depending on the type of loan that you get, you'll notice that you'll be paying a lot more than the purchase price of your house for when you bought it when you went under contract. The interest over 30 years adds up very quickly! So, that's also going to be in your monthly payments and so they divide those payments typically in a fixed mortgage - they'll divide that up over 30 years. You will get a breakdown from your lender of each payment for each month and what percentage of that is interest and how much of that is actually going to your principal or your mortgage balance.
Homeowners Association Dues
After that, you might have an HOA and a lot of places in Colorado Springs have HOA dues. They have a homeowners association that collects these dues to basically manage the neighborhood. They will make sure that the neighborhood is being kept up. Maybe they have someone coming out and planting flowers and making the sidewalk look nice, shoveling snow, things like that. Our HOA is pretty inexpensive where I live. It's about ninety dollars for every three months. There are some neighborhoods that will charge up to three, even four-hundred dollars a month for HOA, but you typically do get things included with that like a swimming pool, trash services, if you're in a townhouse they might take care of your exterior insurance, landscaping, etc. You'll get an accountability sheet of where the money is going so they'll be very transparent with you.
The next thing you're going to need is homeowners insurance. Homeowners insurance is different than private mortgage insurance. With PMI, or private mortgage insurance, the lender needs to be able to ensure that they're going to get their money if you don't pay your mortgage back. That's why typically the lower your credit is, the higher your payment and your mortgage rate is going to be. Homeowners insurance is if something were to happen to your house such as a hail storm (which we've had plenty of those here) or a wind storm that came and took your roof off or half of your shingles, heavy snow that broke a branch off of your tree and landed on your house...anything that happens to your house - you're going to have to have homeowners insurance that's going to cover these types of things. You will have a deductible as well and that can be anywhere from one to two thousand just depending on your coverage, so make sure that you factor that cost in as well.
So, that's basically it! You have your mortgage, your private mortgage insurance, taxes, homeowners insurance, and possibly homeowner association dues each month. These are all the things that you're going to have to consider when you are buying a house. I hope that you learned something today! If you did please like this video and watch next week as I will be sharing with you every Wednesday. If you have any topics that you'd like to go over please put those in the comments and check out the freebies in the description box on YouTube. I hope you have a great week. I will see you on Wednesday!
IRIS BURTON BROKER ASSOCIATE | RE/MAX® INTEGRITY
Colorado Springs, CO REALTOR®
You can learn more about the buying process in this video: ↠ Click to Watch
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