Mortgage payments can usually spike and understanding why they do so can help you from being caught unaware.
Shopping for a mortgage can take about as much time as shopping for a home. Let’s say you finally decided on a fixed rate mortgage, you most likely thought you were committing to a set payment for the life of the loan. But that doesn’t guarantee anything. You could still see a spike in payment. Here is how you can know if your mortgage payment is about to go up.
#1: Property Taxes
Expensive areas and property taxes can place a significant cost burden on any homeowner, and they can fluctuate wildly for a variety of reasons. Home improvements, government tax changes, and rising property values can all lead to an increased assessment.
When an increase in property tax occurs, lenders have to collect a larger monthly amount in the escrow account to cover the cost. This cost is added to your monthly mortgage payment because of the way escrows function, so that means that your payment will see an increase.
#2: Homeowner Insurance
In addition to setting up an escrow account, paying a mortgage means that a homeowners insurance policy will be mandatory. Making improvements on your house like finishing a basement, adding square footage, or upgrading existing appliances to increase a value will also cause a rise in homeowners insurance.
Increases in your mortgage payment may sound incredibly stressful, but with the right preparation, you will be able to handle anything. To properly purchase a home, contact a dedicated home loan specialist like me, Andraya Coulter. I serve the Bay Area and the entire state of California and Texas with quality, suitable, home loans! I can help guide you through the refinance process and make sure you get the home loan you deserve. Call me!