Many of us have heard that mortgages can be cheaper than paying rent, and owning a home is a great investment for building wealth, unlike renting. But Black homeownership has been on a steady decline for years because of the unique barriers we face.
Another possible factor? Owning a home can cost much more than it might seem.
One-time costs, like the down payment, can seem pricey. But one-time payments aren’t necessarily the most costly expenses. For example, Federal Housing Administration loans only require 3.5% down. You’ll also need to pay closing costs, though, and these are typically 3-6% of the home’s value.
What really adds up are the ongoing costs, like your mortgage loan payment.
Mortgage loans require monthly payments. It’s true they can be cheaper than rent, but many mortgage loans also require mortgage insurance, which can raise your payment by a couple hundred dollars each month.
And that’s not all you’ll need to pay monthly.
You’ll need to pay property taxes, which can be steep depending on your area. Also as the owner, you’re responsible for homeowner’s insurance, repairing damage, paying utilities, doing landscape maintenance, and sometimes paying homeowner’s association fees.
Homeownership could still be more cost effective than renting for you. But if you want to own a home, make sure to calculate all these costs, because they can really add up!