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Monthly mortgage payments can change for many reasons; the mortgage payment includes, principal, interest, property tax, and hazard insurance. If you agreed to a home mortgage with a fixed interest rate, the principal and interest portion of the payment will remain the same for the term of the loan; however, if property tax and homeowners insurance are paid from an attached impound/escrow account, those amounts will vary since taxes and insurance will never remain constant. If you pay your own Property Taxes and Homeowners Insurance directly, a fixed mortgage payment would never change.
Property Taxes
Property taxes are assessed by the County Tax Assessor and are usually based initially on the sales price of the home. Property taxes don’t usually sharply rise from year to year; however at times, voting measures may be added to collect funds for government projects and propositions which have been passed into legislation. Owners of higher value properties will likely pay higher property taxes.
The location of the home greatly influences the tax rate, there are states where property taxes are substantially less than others. Taxes do help fund Police, Emergency Services, school districts, and infrastructure; taxes are partially based on how much revenue is required to pay for these services. When additional tax measures are passed, cities and counties collect additional funds.
When purchasing a home, the new buyer most likely will not be paying the same property tax assessed on the prior owner. The homestead exemption allows a portion of your taxes to be discounted, but this exemption is reserved for primary residences only.
Homeowners Insurance
Mortgage companies require Hazard Insurance, which is a general term used for either Homeowners Insurance or Landlord Insurance depending on the occupancy of the home. The cost of insurance, also known as the premium, can vary between areas, insurance carriers and the risk involved generating the premium.
Although coverage may vary, many discounts and credits may be available; type of roof, age of roof, claim free discount, gated community credit, central monitored alarm credit, age of insured, creditworthiness discount (not available in all states), and many more which also vary by carrier.
Apart from all the discounts and credits, the deductible option may make an even greater difference in premium. In order to know your exact annual homeowners insurance premium for the upcoming year, you may wish to get a FREE Online Homeowners Insurance Quote. The homeowners insurance premium will not change for the term of the policy; however, the following year’s premium will depend on the upcoming rates which are calculated by an actuarial firm taking into consideration your insurance carrier’s loss experience in the specific geographic area – rates are adjusted on an ongoing basis to make sure that the insurance company will remain financially secure and able to meet the claims of its policyholders.
The best way to make sure that your Property Taxes and Homeowners Insurance is offering you the best rate, you’ll need to contact both the County Tax Assessor’s office as well as your Insurance Company’s Customer Service Department to find out if anything can be done to reduce your annual outlay.
