No matter what sort of property you buy, there are costs you’ll be paying each month. Today we’ll be talking about how these can affect your home equity.

Equity is a term that describes how much money you’d have if you sold your home. If you have a $100,000 mortgage and could sell for $300,000, you have $200,000 in equity.

Monthly costs include property taxes, common charges, maintenance fees, utilities, etc. These monthly costs are often a significant factor in your home equity.

If you live in a land-lease building, for example, fluctuating monthly costs can negatively impact your equity. If somebody raises the rent on the property that you “own,” it takes away your equity growth.

"Monthly costs are vital to understanding a home’s current and future equity."

Utilities also play a role in hurting equity—an energy-inefficient home means high utility costs. People can spend hundreds on cooling in summer and hundreds more on heating in winter. This also hurts landlords who pay these bills.

Properties with higher taxes won’t increase as much in value. If a home is $1 million and another is $500,000, but the first home has zero monthly costs while the second has $4,000 each month, the $1 million home will sell in a heartbeat. Despite being much cheaper, the $500,000 home will be much harder to sell—in some cases, property taxes can make a home unable to be sold at all.

Monthly costs are vital to understanding a home’s current and future equity. If you have any questions or would like more information, feel free to reach out to me.

A 33% debt-to-income ratio for two prospective purchasers. At 3.5% their income must be at least $226,000 a year whereas at 5% the income must be $257,000 a year.

A 33% debt-to-income ratio for two prospective purchasers. At 3.5% their income must be at least $226,000 a year whereas at 5% the income must be $257,000 a year.

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