Mortgage Rates

For the most part, when I open my bills in the mail, I know what to expect. Yeah, I know some people like the electronic copy of their bills, but sometimes I miss them, they get caught in my junk mail, or I’m not entirely sure what I’m looking at on screen. With that said, I still like to receive the paper statement and at least scan it to make sure everything seems normal. If something looks out of place, I usually make a call to the company. A five-minute call to receive a $25 correction on one of my bills is well worth my time, and sometimes I save a lot more.

Recently though, my jaw dropped when I saw that my mortgage statement jumped nearly $500 per month. Unfortunately, a phone call to my bank didn’t change the new amount due.

While it’s true that 90 percent of Americans have a fixed or locked rate, myself included, that doesn’t mean your mortgage can’t jump.

Here’s what I learned:

The reason our mortgage increased had less to do with our bank and rate, and more to do with tax assessments and what our home is worth.

As explains, “tax assessments affect mortgage payments because most homeowners pay their property taxes ‘out of escrow.’ Each month, their mortgage payment includes an amount of money specifically designated for paying property taxes. Their mortgage company collects this money and holds it in a separate account – called an escrow account –until it’s time to pay property taxes. When the taxes are due, the mortgage company pays them on behalf of the homeowner, using the money in the escrow account.”

That amount collected for escrow ties in with your home’s value and it can change for a couple of different reasons: perhaps there was a miscalculation when you first secured your mortgage, or quite possibly the value of your home has gone up. The frequency in which property values are assessed for tax purposes can vary depending on your state or county. For some it’s every year, for others, it’s every five to seven years – and in some cases, it’s when a home is sold or refinanced.

A change in your home’s tax assessment is both good news and bad news. If the assessment rises, it means that your property value has gone up — but it also means your property taxes are likely to go up, too.

The bottom line is the amount you’re required to pay can jump even with a fixed mortgage, and given that housing is generally the largest item in a family’s budget, a cost that was once expensive can turn outrageous.  At least that’s how I felt when I saw mine jump $500 dollars.

If I divide that out, I’m now approaching $94 per day for our home mortgage if I divide the cost out over an estimated 30-day monthly period. This is all to say that hard times happen and unexpected costs can spring up.

That’s why it’s important to keep costs low in other areas of our lives. Thankfully, our families combined electric, and natural gas bill averages out to around $200 a month, or roughly $7 per day. Stable energy prices give Americans like me the confidence in knowing that my energy bills are less likely to skyrocket than my mortgage payment. Especially since energy costs, if stable, are a fraction of my family’s budget compared to what it costs us to own our home.

While many of us feel the financial strain of how to juggle all of our bills every day, it’s a real benefit that we don’t have to add energy to it.