Every year, at about this time, I start to get calls from people that their mortgage payments have increased. They call yelling at me saying “Todd, you remember at the closing table both you and the escrow officer insured us that this was a fixed rate mortgage, how come are payments have risen?”
Well, there are 4 parts to your mortgage, principal, interest, taxes and insurance. The first two principal and interest are fixed and those are what you agreed to when you signed the loan, they will be fixed for the entire 30 years and will never change.
The next two however aren’t fixed and aren’t really part of the mortgage, they are just collected by your mortgage company and paid on your behalf. Insurance can go up or down and based on that, you could actually have to pay them less next year. But, the taxes, well, we all know those don’t go down, they only go one direction and that is the one that is actually causing your payments to increase.
What is happening is your mortgage company has to increase the amount they are holding in escrow for you in order to pay the taxes every year on your behalf, because if they don’t then you would get a huge tax bill every year rather than having it taken with your payments each month.
So, I hope this explains why your monthly payments went up on your 30 year fixed mortgage. If you know anyone looking to buy or sell a home in the Beaverton, Washington County area, give them our number, we are the Friendly home team and we would love to help another family home.