Why Did My House Payment Go Up?
Some of us may see our house payment increase even if we have a fixed rate mortgage. This usually causes great confusion and stress as the homeowner is not made aware of this possibility at the inception of the mortgage.
Property Tax Assessments are done by the county on an annual basis. In a market where home values are going up, usually the assessed value of your home by the Tax Assessor also goes up. This results in the property tax owed also going up.
If your property taxes are included in your escrow payment portion of your house payment, they will be effected by this. The escrow account is a shared account, designed to create a cushion so the property taxes can be paid by the bank on the borrower's behalf as they are due, and it is there to protect the investor. For example, if a homeowner doesn't pay their property taxes, a tax lien can be placed on the property, and property taxes always have legal priority in collection or foreclosure. This puts the bank's investment with you at risk. The bank carrying your mortgage wants to make sure the property taxes are paid.
When the property tax amount due goes up following a higher assessment, so does the monthly payment required to keep that cushion in your escrow account. Therefore, your mortgage payment will go up in the amount making up that difference, or what it is sometimes referred to as an escrow deficit.