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:
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.
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 homeowners 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.
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