Why Did My Mortgage Payment Increase!?

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Many homeowners are asking themselves what happened after seeing their February 1st mortgage payment! Seasoned homeowners may come to expect this, but the jump in your monthly payment can be shocking for recent and first-time home buyers. Below I will explain a few of the common reasons for the increase in your mortgage payment, along with some strategies to fight this price increase in the future.

5 Reasons Your Mortgage Payment Increased

  1.  Shortage in property tax payment
    • This hits you twice as you not only have to make up the shortage, but then they increase your payment again, so you won’t be short this year. See example 1 below.
  2. Your insurance premium increased.
  3. You have an ARM and your interested rate increased.
  4. There was a minor miscalculation in your escrow.
  5. Your escrow dropped below its minimum and you are required to bring the value back up.

4.5 Strategies to LOWER Your Monthly Payment

  1. Pay your tax shortage in one (1) lump sum.
    • The only increase will be for the current year's taxes. See example 2 below.
  2. Shop your homeowner’s insurance to find a cheaper rate.
    • Don’t always choose the cheapest! Working with a trustworthy insurance broker will allow you to get quotes from many companies at once and determine what is best for you.
    • Contact me for a great insurance guy!
  3. Remove your Private Mortgage Insurance (PMI).
    • Conventional loans only, read more about PMI removal HERE.
  4. Refinance your mortgage.
    • Contact me ASAP if this is something you are considering.
  5. If you have already attacked your mortgage payment, shop your other monthly bills.
    • I have partnered with a company which allows me to offer my clients the same services you already pay for at VERY competitive rates. See more HERE or Contact me.
    • Ask me how to earn FREE electricity or wireless service.

Be Proactive to Keep Your Monthly Payments Low

  1. Make sure you have your Texas homestead exemption filed on your principal residence.
    • See last months newsletter or my blog post about it HERE.
  2. Be sure to protest your property tax assessment EVERY year!
    • More info regarding this topic in future posts.
    • Contact me today if you have questions regarding your current county tax assessment.

Scenario for Examples 1 & 2

Property at 123 Main St, Anywhere, TX 12345

2017 Assessed Value: $181,507

2017 Taxes Due: $4,831

2016 Taxes Due: $4,489

2017 taxes ($4,831) are paid by escrow but only 2016 taxes ($4,489) were collected leaving a shortage of $341 AND an increase of $341 to make sure there is no shortage at the next payment.

Example 1 – Owner Chooses to make up the difference in 12 monthly payments.

Shortage=$28.42

Increase=$28.42

Total monthly payment increase of $58.84 (YIKES!)

Example 2 – Owner chooses to pay the shortage in a lump sum.

Shortage=1 payment of $341

Total monthly increase of $28.42

 

Either way, you pay all of it.

 

*DISCLAIMER* mortgage companies may vary in how they handle escrow shortages. Any specific questions concerning YOUR mortgage should be directed to the servicer of you loan.