Mortgage Increase

Asked by Regent16, 91406 Wed Jan 2, 2013

I bought a house at the end of 2011 with a fixed rate of 4.5% for 30 years. At the end of my first year of ownership I got a letter from my mortgage stating that due to a revision of my escrow account w/ regards to property tax and/or insurance premium increases my monthly payment has increased by over 1500. Is that how it works or is there something I might be missing?

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Linda Jones’ answer
Linda Jones, Agent, Canton, GA
Wed Jan 2, 2013
Every year lenders reassess your escrow account to make sure that there are adequate funds to pay the property insurance and property taxes. At closing, it is unclear what the actual property taxes will be for the new owner and they estimate based on the current tax bill. The property value could have increased, or you were not able to take advantage of an exemption that the previous owner had, both can make the tax bill increase.

You may see this adjustment every year, sometimes it up and sometimes down.
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