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Homeowners are feeling the weight of surging tax and insurance costs, and first-time buyers are sometimes waking up to unpleasant surprises when they see the bill, according to a new analysis.
Property taxes and homeowners insurance costs now make up an average of 21% of monthly mortgage payments across the U.S., according to research conducted by Columbia, Missouri-based Neighbors Bank.
In markets where tax and insurance payments are the highest, their share can consume over one-third of the monthly amount due, leaving less available to reduce principal and interest.
While much of the housing affordability discussion is focused on home prices and interest rates, tax and insurance cannot be left out of the conversation with buyers, the bank said in its look at "hidden" costs.
"These nonmortgage costs can quietly add hundreds or even thousands of dollars to monthly housing costs. As a result, many borrowers only grasp their impact once the first few payments come due," said...