Question:

How big are the housing expenses?

Answer:

Housing expenses are the costs of living in your house. These may include the principal and interest on your loan, together with property taxes and insurance. Some people do not actually know how big their housing expenses are and it comes to them as a shock when they find out the mortgage payment is bigger than the principal and interest required to pay on the loan.

In the US, property taxes and insurance are paid on annual or biannual basis. Borrowers with less than 20% down payment are required to open an escrow account to handle all housing expenses there are. The escrow account is opened by the lender to make sure housing expenses are paid on time and the collateral is well protected.

Beside the PITI payment, you may be asked to cover additional housing expenses such as maintenance or monthly fees in condominiums, PUD or cooperatives.

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