7 ms·
Hypothetical house in New Hampshire, north of Boston: $600k purchase price 10% ($60k) down $540k interest-only mortgage @ 2.25% = $1,012/month payment $12k
by nugget 6y ago
Hypothetical house in New Hampshire, north of Boston:
$600k purchase price
10% ($60k) down
$540k interest-only mortgage @ 2.25% = $1,012/month payment
$12k in property taxes and $3k in insurance (annual) = $1,250/month payment
Even if you pay off the loan balance, that other $1,250/month lasts forever.
As loan rates fall and property tax rates increase, you're seeing parts of the US (TX, NH, NJ, IL) where the majority of the monthly payment is for taxes, insurance, maintenance, and other expenses that continue perpetually. Which can lead one to re-examine what it really means to "own" a house in the first place.
- OldHand2018 6y agoI’m not really following you. The mortgage is just you paying back the money you borrowed to buy the place. Are you expecting that owning property should incur no ongoing cost? By the way, your example mortgage has X number of $1012 monthly payments, and then a final $540,000 payment. That’s why it “costs less” than your taxes/insurance/maintenance.
- amscanne 6y agoThe parent is saying that the monthly taxes and other costs are greater than the interest on the mortgage. So the idea that you've "paid off" your house provides a false sense of security: it will continue to have significant carrying costs.