Mortgage Going Up?

Not long ago, I remember reading a post on kathleen’s blog frugal portland about her mortgage going up. I was unsure how that could happen since I thought rates and prices were locked in for the term of the loan. You know you’d pay the same amount over the entire term of the loan, and that made purchasing a home and budgeting a ton easier. Kathleens mortgage went up because her property taxes (and HOA) went up, which caused her monthly payment went up over 50%.

Below is what our kitchen used to look like.

kitchen

I remember thinking to myself, god that sucks. You figure on signing up for a mortgage and always paying the same amount then you go get jerked around like that?

Well, in case you couldnt guess from the title, the same thing has just happened to H and I. We got a notice from the bank in late February that our mortgage payment was going up by about 13%, from under 1100, to about 1250. Since I had read kathleen’s post, I had heard of this happening but I didnt expect it to happen to H and I.

After doing a bit of digging, I realized that our taxes stayed the same – at what I’m sure a lot of you would consider an astonishingly low rate of ~900 per year. What did change though, was our home insurance (which is paid out of escrow)  went up an astonishing 33%, and was also underpaid a bit last year. So, not only did we need to fund our escrow fund more because of higher insurance rates, but our escrow had a negative balance because our home insurance was more than the estimate we were given when we signed the mortgage papers.

Now, this year we need to pay ourselves back (our escrow balance is about -300 bucks) over the course of the next 12 months, and we need to cover the increased insurance premiums as well. Of course, this isnt going to be any fun, with bringing home the baby and increased spending that will come that. We can absorb this into our budget, but it’s going to take away from our other savings goals, unfortunately.

Not only did our rates go up 33% for our home insurance, they reduced the amount of coverage that we have. The changes were clearly laid out in the letter we got increasing our cost. They were getting rid of most of our coverage for most types of water damage. They would no longer cover any flooding in the basement or water leaking from pipes and that sort of thing. I thought that was handy, as I’m in the process of redoing our basement and have found a fairly significant amount of mold damage to just about every portion of the basement that has been under demo so far. They must have known something, or just been lucky to reduce their risk of exposure to damage claims (though I doubt that we could have submitted one anyway).

So, last fall when I focused on lowering our monthly nut in terms of the cost of internet and our cell phones, but kind of hemmed and hawed about moving on to insurance. This nice little kick in the pants caused me to start looking into lowering our insurance costs, for both home and auto. I’ll write about how I did that in the future.

Readers: Has your mortgage payment gone up? Did your insurance rates go up this year?

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4 thoughts on “Mortgage Going Up?”

  1. I actually had the opposite happen to me for the first three years that I owned my house. Every year my payment would go down, and I’d get a check for the overages that were in my escrow account due to my property taxes going down. Which was all fantastic until last month I found out that they went up. thankfully not by much (I think I’m paying maybe $20 more a month) but still a drag when I was getting used to paying less and less each year!

    • I totally know how you feel there. All that excitement for a while then a little bit deflated after prices going up. Be thankful it was a small amount – I’m still kind of shocked at how much our went up when our property tax stayed the same.

    • That must be nice! I still get the bills, the funds are just paid out of escrow. I wonder if it’s a state thing, because we put 20% down as well.

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