The statement “Insurance and Taxes cost more than mortgage” applies to us since we haven’t had a mortgage since 1990. The concern is that it also applies to people who do have a mortgage, pushing affordability even lower.
Soaring costs for home insurance and property taxes are busting homeowners’ budgets.
Insurers have pushed big rate increases because of losses from natural disasters and rising costs to repair homes. Surging home values in recent years, meanwhile, have lifted property taxes for many homeowners.
These ballooning expenses are rewriting the math of homeownership. In September, 32% of the average single-family mortgage payment went to property taxes and home insurance, the highest rate ever for data going back to 2014…
Those most at risk are older homeowners on fixed incomes…“Even if their mortgage payment went away 10, 15, 20 years ago, they’ve done the math for their retirement based on increases of some kind, but not these massive ones…” [end quote]
The statement can also be mostly meaningless even for people with a mortgage. For example, my wife and I bought only 1 house in the mid-90s, and we only took one mortgage, and then refinanced it about 14 years ago which LOWERED the monthly payment somewhat. So let’s review:
One mortgage, with a fixed payment nearly 30 years ago (we put exactly 20% down).
A new mortgage with a lower fixed payment nearly 15 years ago.
Meanwhile taxes and insurance have gone up over the nearly 30 year period.
Why would anyone not expect the taxes and insurance to potentially become larger than the mortgage payment? The taxes and insurance go up each year while the mortgage payment is either fixed or goes down due to favorable interest rates.
(I just checked and our insurance plus taxes divided by 12 comes to about 100 bucks less than the monthly mortgage payment. But that mortgage payment will end in late 2025 or early 2026. The insurance and taxes will never end.)
More media hype? Like the screeds about “half of USians pay no income tax”, or “half the people in the UK receive more in benefits than they pay in taxes”?