Taxes & Insurance

So Stephanie and I are looking for a house. And we are facing not only the issue of interest rate increases in the next couple of months, but also the cost of taxes and insurance. We are working on being pre-qualified for a home loan which (people say) makes the process easier.

When determining the total payment (and ultimately the housing debt to income ratio), our prospective lender is figuring on 2.5% for property taxes and 1.5% for insurance. That’s $4000 worth of additional costs for every $100,000 of value in the home. That means it’s an extra $333 per month on top of the principal and interest for every $100,000 of value.

Heaven forbid we have to pay PMI. Depending on the amount you put down, you could be faced with .78% — that’s $780 per $100,000 or an extra $65 per month per every $100,000 of home value.

Ouch. I’m just trying to figure out where all this money goes. And also wondering how some people say taxes are too low?

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