First Time Home Buyer: Why My Mortgage Has Increased?
Shopping for mortgages can take just as much time as shopping for a home for sale in Phoenix AZ. But when you finally decided on a fixed-rate mortgage, you most likely thought you were committing to a set the same mortgage payment for the life of the loan. Unfortunately, even you intentionally steer clear of adjustable-rate mortgages and try to stay true to the monthly mortgage payment your budget allows, you could still be in for a price hike.
Here are why:
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Escrow Accounts
If you had mortgage with lender, your lenders will most probably require you to establish an escrow account. On top of your monthly mortgage payment, the lender will collect an estimated monthly amount to cover your property taxes, homeowners’ insurance and private mortgage insurance for the year. The funds will be held in the escrow account until the bills become due and paid through this escrow account.
You might be interested: What is Escrow Account When Buying a House?
Because of these expenses and add them to your monthly mortgage payment, what’s going on with your escrow account behind the scenes can be the reason your monthly payment increases.
Property Taxes
Property taxes, especially in expensive areas, can place a significant cost burden on homeowners. Home improvements, rising property values, and government tax changes can all lead to an increased assessment. Rising property taxes can be disputed by filing an appeal for a lower assessment amount, but there are no guarantees the ruling will land in the homeowner’s favor.
Homeowners Insurance
Your lender most probably require you to have homeowners insurance. Making improvements such as finishing a basement, building on additional square footage or upgrading existing elements within the home to increase its overall value will also cause a rise in homeowners insurance costs. Just like the jump in property taxes, this increase will show up in the amount collected for the escrow account.
Swee Ng, Realtor and Phoenix East Valley resident specializing in win-win real estate transaction through great communication and fighting for his clients’ best interest. After all, this is more than real estates, this is about your life and your dreams.
If you are looking to buy or sell your home in Phoenix AZ area, we hope you will consider us. Contact us today for complimentary consultation.
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