HOMEBUYING: What's the accurate monthly cost of your home?
- Noir Holdings, LLC
- Jun 23
- 4 min read
Buying a home today can be difficult, especially in the Chicago area where move-in ready homes in great locations go under contract quickly. Sometimes the most desirable homes have multiple offers which can boost the purchase price of a home even higher.
Before you get around to making a purchase offer on a home, you need to fully understand what your maximum purchase price should be. Your mortgage lender can help you arrive at that figure. The best way is to get preapproved for a home loan before you start home shopping.
For example, a $550,000 home with a $440,000 30-year, fixed-rate mortgage at 6.3% interest would come to $2,723.48 per month. You determine that yes, you can afford that $2,700 monthly payment. So it seems very clear that you can afford that $550,000 home.
However, there are several other monthly payments that you will have to consider when you buy a home. These other monthly costs can affect your financial comfort, so you need to take them into account when determining your true monthly payment. Let’s take a deep dive to understand why being able to afford your home’s monthly payment is looking at more than just your monthly mortgage payment.
Property taxes
Suburban Chicago property taxes vary, understandably by locale and school district. Generally speaking, most counties such as DuPage, Kane, Will, and parts of Cook range around 1.5% to 2.5% of the property’s market value.
For that $550,000 home, the first year’s property taxes could amount to $8,250 to $13,750, which amounts to $688 to $1,146 monthly. Remember that monthly property tax payments may be automatically added to your monthly mortgage payment if you have an escrow account. Consult your mortgage lender for details.
To calculate your potential home’s new property taxes, consult with the home's county taxing authority. Keep in mind that the taxes may rise after purchase.
Homeowners insurance
Suburban Chicago homeowners insurance rates average around $2,600 to $3,600 annually. Your actual homeowners insurance amount is dependent upon the type of coverage you select, your deductible, and the size, age, and condition of your home. Keep in mind that homeowners insurance is required if you have a mortgage on your home and is highly recommended even if you don’t have a mortgage.
This would be an additional $200 to $300 per month payment for a $550,000 home. If you have an escrow account, this monthly payment may be included with your mortgage payment. Your mortgage lender can give you info.
Your homeowners insurance price will be known before closing. Contact your insurance professional for a quote and don’t hesitate to shop around for discounts with other carriers.
HOA (homeowners association) fees
In areas that have an HOA, fees can vary, but for single-family homes average around $100 to $300 per month. These fees vary depending upon the amenities your community has which might include a pool, club house, etc. and the services provided such as landscaping, snow removal, etc.
Keep in mind that HOA fees are generally not tied to your home’s value or mortgage.
Before purchase, any HOA fees will be disclosed. Contact the HOA board for your home for details.
Private mortgage insurance
When you purchase your home with a conventional mortgage and your downpayment is less than 20% of the purchase price, your lender will require you to pay private mortgage insurance (PMI). PMI can amount to 0.5% to 1.5% of your mortgage amount.
For example, with a $440,000 mortgage, you would pay approximately $2,200 to $6,600 per year, or $183 to $550 monthly.
PMI is not paid forever. PMI will automatically be canceled by your lender when your mortgage balance reaches 78% of the home’s original purchase price. Alternatively, when your mortgage balance reaches 80% of your home’s original purchase price, you can also apply through your lender to remove PMI.
Your lender will disclose all PMI amounts before closing. If you can afford to put 20% down on your home, it may make financial sense to do so to save paying PMI fees.
Maintenance and upkeep
Financial experts recommend setting aside 1% to 3% of your home’s purchase price each year for maintenance and upkeep.
For that $550,000 home, it’s advised to save $5,500 to $16,500 each year, or $459 to $1,375 per month. Keep in mind that older homes may require more expenses and newer homes, less.
Even if you don’t use the cash you have stashed away every year, it’s a good idea to keep funding your savings to build up cash for updates and remodeling in the future. You can also accumulate money for bigger ticket repairs (siding, roof, new driveway, etc.) that arise. Having such a financial resource could save you money in the long run by not having to take out a home equity loan or line of credit, refinance your existing mortgage, or secure another type of loan.
Looking to buy a home?
Check out Noir Holdings’ updated homes available in established neighborhoods in suburban Chicago: www.noirholdingsllc.com Buy direct from Noir Holdings and save!
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