Is Your Mortgage Loan Payment About To Increase?

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Is Your Mortgage Loan Payment About To Increase?
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The ins and outs of escrow accounts

• If you borrowed more than 80 of the value of
  your home, many lenders will require you to
  establish an escrow account. On top of your
  monthly mortgage payment, the lender will collect
  an estimated monthly amount to cover your
  property taxes, homeowners insurance, private
  mortgage insurance, and homeowners association
  dues (if applicable) for the year. The funds will
  be held in the escrow account until the bills
  become due.
• For the homeowner who has trouble saving
  throughout the year for these large bills, escrow
  accounts can be a huge help. However, because
  they break down these expenses and add them to
  your monthly mortgage payment, whats going on
  with your escrow account behind the scenes can be
  the reason your monthly payment increases.

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Reason 1 Property taxes

• Property taxes, especially in expensive areas,
  can place a significant cost burden on homeowners
  and they can fluctuate wildly due to a variety
  of factors. Home improvements, rising property
  values, and government tax changes can all lead
  to an increased assessment.
• When this increase occurs, lenders must begin
  collecting a larger monthly amount in the escrow
  account to cover the estimated cost. Since the
  additional money being funneled into this account
  is collected in one lump-sum amount with the
  mortgage payment, the homeowners total monthly
  cost will rise as a result. Rising property taxes
  can be disputed by filing an appeal for a lower
  assessment amount, but there are no guarantees
  the ruling will land in the homeowners favor.

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Mortgage Loan
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Reason 2 Homeowners insurance

• In addition to setting up an escrow account,
  financing a mortgage means homeowners insurance
  will be a requirement. Making improvements such
  as finishing a basement, building on additional
  square footage, or upgrading existing elements
  within the home to increase its overall value
  will also cause a rise in homeowners insurance
  costs. Just like the jump in property taxes, this
  increase will show up in the amount collected for
  the escrow account. Make sure to shop around for
  the best rate, and factor in this increased cost
  when you budget for any large renovation/remodel
  projects.

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Reason 3 Lender error

• While its usually unintentional and the result
  of simple human error, sometimes lenders
  miscalculate the monthly property tax and
  insurance escrow payments needed to cover the
  annual total. Unfortunately, its the homeowner
  who has to shoulder the expense of these
  miscalculated payments, which sometimes result in
  a steep increase in monthly costs. After all,
  property taxes and insurance costs must be paid
  in total regardless of what the homeowner
  believed the cost to be. To avoid this rude
  awakening and an increase that could potentially
  make your home unaffordable, make sure all
  estimated costs have been thoroughly checked and
  budget in a cushion to your anticipated monthly
  mortgage loan payment. This will ensure that any
  increase will be seen merely as a hiccup and not
  a reason to go into full-on panic mode.

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Source http//www.trulia.com/blog/is-your-monthly
-mortgage-payment-about-to-increase/
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