You think every year your mortgage goes up?
Are you one of those who thinks that every year your mortgage goes up? There are homeowners who think that the escrow account is only the payment of the mortgage and are amazed when they see that it varies once a year. “I have a fixed-rate mortgage, and yet every year these people raise my mortgage.” This is the usual comment from people who do not understand what an escrow account is and what it includes.
The first thing we must know is the escrow account or custody account. It is a guarantee account established by the creditors – who lend the money – to guarantee that the person who is buying a house pays all the debts of it. That account is included in addition to the mortgage payment, insurance, and property taxes.
This account is sometimes managed by the bank that granted the mortgage or on other occasions, it is managed by a mortgage administrator. That is, when you pay, say, $2,300 into your escrow account each month, that includes $1,700 in the mortgage, $400 in insurance, and $200 in property taxes.
Why can the amount deposited in the escrow account be increased? Well, insurance or property taxes may go up once a year and be reflected in the amount you must pay in your escrow account.
In the case of the house tax, what happens is that each year, a county official is in charge of assessing the value of the property and in August, issues a notification with the new assessed value of the house. What is known here in Florida as millage, which means that, for every thousand dollars of the appraised value of the property, the owner will pay one dollar of tax, less the exemptions established by law.
As you can see, it is not that the mortgage goes up, what goes up is the value of your property and the insurance premiums.
You will say: “In the end, I have to pay more”. Yes it is true, but by being informed and you can act accordingly. You, for example, could try to lower your insurance premium by calling Univista Insurance and save some money from the guarantee account. Are you one of those who thinks that every year your mortgage goes up?