It’s the news no one wants to hear: “increasing housing costs.” Yet, it’s a natural part of homeownership, even if you own your home free and clear. Recently, many homeowners have been asking, “Why has my mortgage payment gone up?” Let’s break it down and look at the potential reasons behind these changes.

Why Your Mortgage Payment Might Be Increasing

If your mortgage payment has gone up, the first step is to review the two key factors that could impact your escrow account:

1. Property Taxes:

• Local governments reassess property values periodically, which can lead to higher property taxes. Even if your home’s value hasn’t changed significantly, increases in tax rates can cause your tax bill to rise.

2. Homeowners Insurance Premiums:

• Insurance premiums can increase due to inflation, changes in coverage requirements, or a reassessment of risk factors for your area (e.g., natural disasters, crime rates).

The Role of Your Mortgage Servicer

Your mortgage servicer manages your escrow account to cover property taxes and insurance. When these costs go up, your escrow account may have a shortage, meaning there isn’t enough money to cover the increased expenses. Here’s what typically happens:

• Your mortgage servicer will notify you of any escrow shortage or overage.

• Your Options: If there’s a shortage, you will have two choices:

1. Pay the deficit in full.

2. Spread the shortage over the upcoming year, which results in a higher monthly mortgage payment.

What You Can Do

If you’re unsure why your payment has changed, or if you anticipate changes, take these proactive steps:

1. Request an Escrow Analysis:

• Contact your mortgage servicer and ask for a detailed escrow analysis. This report will show how your escrow payments are allocated and explain any increases.

2. Review Your Property Tax Bill:

• Compare your current property tax bill to the previous year. If you’ve seen a significant increase, it may be time to contest your property assessment.

3. Shop for Homeowners Insurance:

• If your premium has increased, consider getting quotes from other insurance providers. You might be able to find a more competitive rate that meets your needs.

A Partner in Homeownership

Navigating rising housing costs can feel overwhelming, but you don’t have to do it alone. Whether you need help understanding your escrow account, appealing a property tax increase, or finding ways to save on insurance, we’re here to help.

Have questions? Reach out today to Gervais Mortgage discuss how to better manage your housing expenses and protect your investment in homeownership.