Why your 'fixed' mortgage payment keeps going up
Homeowners with fixed-rate mortgages may experience rising monthly payments due to increases in escrow costs. Escrow accounts, which cover homeowners insurance and property taxes, are projected to be short for about 65% of homeowners this year. The average shortage is estimated at $2,157, with some states seeing increases as high as 77%.
- ▪Fixed-rate mortgages do not guarantee stable monthly payments due to escrow costs.
- ▪About 65% of escrow accounts are projected to be short this year.
- ▪Escrow costs have increased by roughly 45% since 2019, with some states experiencing even higher jumps.
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As many homebuyers discover, getting a fixed-rate mortgage doesn't necessarily mean your monthly payment will remain the same.For many homeowners, in addition to principal and interest payments each month, their mortgage payment includes amounts that go into an escrow account. That account then pays out homeowners insurance premiums and property taxes, as well as mortgage insurance if the borrower is required to carry it. This year, about 65% of escrow accounts are projected to be short because of recent jumps in those costs, according to Cotality, a property data and analytics firm. The estimated average shortage is $2,157.While it's not uncommon for escrow costs to be adjusted up or down each year, they have increased by roughly 45% since 2019, according to Cotality.
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