If you are an existing homeowner who bought your property as late as 2022, you probably have a really low, fixed priority rate. Maybe something that starts with a 2, 3 or 4.
After all, the priority rates hit record low in 2021 and were generally very cheap for about a decade.
In the spring of 2022, it changed and the rates began to grow higher as inflation seized, and Fed ended its MBS purchase program known as quantitative relief (QE).
While 30-year-old regular priority rates are no longer a screaming offer, they are not far from their long-term average of approx. 7.75%.
But because everything else is so expensive, the mortgage loan itself eats a smaller proportion of total housing costs.
Housing costs go far beyond a simple priority loan
A new study from Real Estate Witch found that non-lending costs have risen to $ 24,529 for 2025, up from $ 17,958 in 2024.
This includes homeowners insurance, property taxes, home renovation, routine maintenance and monthly utilities.
The degraded it looks like this:
Utilities: $ 7,319
Maintenance: $ 6,087
Renovations: $ 5,762
Property Taxes: $ 3,057
Homeowners Insurance: $ 2,304
Depending on where you live, some of these costs may seem low or high, but these are the average costs taken from different sites used for the study.
And the chances of homeowners -insurance only going up next year, virtually wherever you live.
Meanwhile, the typical household spends $ 26,508 annually on the mortgage loan, which is not much more than these other costs combined.
In other words, the mortgage loan now accounts for only half of the total annual housing expense.
If we include people living in homeowners associations, the total amount will increase to $ 27,606 annually, which is over the typical priority expense.
This is something to consider if you weigh a rent versus purchase decision and focus only on mortgage rates and house prices.
Be sure to consider all the other costs, both expected and unexpected when making this decision.
The study also revealed that approx. 8 out of 10 homeowners (81%) said the “true cost of owning a home” were higher than expected.
Meanwhile, almost half (44%) said they thought it is easier to be a tenant than a homeowner.
We pay all for these record -low priority rates indirectly
Lately, the mortgage loan has become one of the cheapest components of home ownership, while all the other costs have become more expensive.
This is pretty unique and it is likely because of the record loans that, ironically, can be blamed for the subsequent inflation we have experienced recently.
You can see, all these years of light money and low interest rates had a price. And this price is inflation where the dollar erodes in value, as the cost of almost everything has risen tremendously.
However, the lucky homeowners who were able to lock a 30-year-old to 2-4%have an incredible inflation hedge.
But you can argue that they pay for it in another way now through rising costs elsewhere.
And it is even worse for those who have not yet entered the housing market that are facing the worst affordable prices for decades.
Tenants deal with higher costs everywhere due to all the inflation that can partially be blamed on the zero interest rate policy (ZIRP) in place after 2008 and again during the pandemic.
However, they receive none of the benefits, as opposed to homeowners.
Meanwhile, there are home buyers who had to settle for a priority rate in the area 6-8% over the past few years due to the said inflation.
Everything has a price, and in the end this creates an even greater gap between the gardens and has no -not.
Once you are free and ready you still won’t be really free as homeowner
This brings up another important point. Say you pay your priority loan in full. Many people have been great with paying the mortgage loan early recently.
Although I do not agree with it if you assume you have a super low fixed rate (which I see as good debt), it does not mean that you are without payments.
As illustrated above, you are still on the hook for property taxes, homeowners insurance, maintenance, utilities and renovations if necessary.
And it can make up a lot of money even if you no longer have a priority loan.
So one has to question whether free and clear actually live up to its name. Of course it’s a minor bill, but that doesn’t mean you live for free!
Long story short, if you are considering buying a home, make sure you use a good mortgage lime that factors in all the monthly costs.
And don’t underestimate anything. If something overestimates to give way in case these costs continue to rise. They will probably!
Otherwise, you may be like the almost 1 in 4 millennium homeowners (23%) who said the cost of home ownership has made them want to go back to rent.
The study conducted between 27 and 30 November 2024 asked 1,000 US homeowners about their home -related expenses and their experiences dealing with these costs.
(Photo: Atramos)
Before creating this site, I worked as a banking director of a wholesale loan in Los Angeles. My practical experience in the early 2000s inspired me to start writing about mortgage loans 19 years ago to help potential (and existing) home buyers better navigate the home loan process. Follow me on Twitter for Hot Take.
