Chapter 10: Taxes, Insurance, and HOA Fees, the Ongoing Bills

Chapter 10: Taxes, Insurance, and HOA Fees, the Ongoing Bills

A Scene from Real Life

A family bought their home, happy with the $1,800 payment. A year later: property tax up $600, insurance up $300. The “fixed” payment became $2,050. Nobody told them the payment moves.

Property Tax

About 1-2% per year depending on state. On $320,000 in MA: ~$3,700/year. Paid via escrow. Review yearly and appeal if inflated.

PMI: The Tax on a Small Down Payment

Charged under 20% down. Get rid of it: automatic at 22% equity, by request at 20%, or via refinance. FHA MIP: never cancels — refinance to conventional to escape.

HOA Fees

Typically $200-500/month, rising yearly. Watch for special assessments ($5,000-15,000). Read the HOA rules before buying.

Homestead Exemption

Many states offer a homestead exemption cutting your property tax. File at your city’s assessor office after purchase.

Action Steps

• Estimate tax: price × state rate ÷ 12.
• Get 3 insurance quotes a month before closing.
• Track equity; request PMI cancellation at 20%.
• File for homestead exemption right after purchase.

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