It is that time of year again… Todd, why did my payments go up on my mortgage?

Real Estate Agent with Keller Williams Realty

Every year, at about this time, I start to get calls from people that their mortgage payments have increased. They call yelling at me saying “Todd, you remember at the closing table both you and the escrow officer insured us that this was a fixed rate mortgage, how come are payments have risen?”

Well, there are 4 parts to your mortgage, principal, interest, taxes and insurance. The first two principal and interest are fixed and those are what you agreed to when you signed the loan, they will be fixed for the entire 30 years and will never change.

Paying your taxes with your mortgage payment

The next two however aren’t fixed and aren’t really part of the mortgage, they are just collected by your mortgage company and paid on your behalf. Insurance can go up or down and based on that, you could actually have to pay them less next year. But, the taxes, well, we all know those don’t go down, they only go one direction and that is the one that is actually causing your payments to increase.

What is happening is your mortgage company has to increase the amount they are holding in escrow for you in order to pay the taxes every year on your behalf, because if they don’t then you would get a huge tax bill every year rather than having it taken with your payments each month.

So, I hope this explains why your monthly payments went up on your 30 year fixed mortgage. If you know anyone looking to buy or sell a home in the Beaverton, Washington County area, give them our number, we are the Friendly home team and we would love to help another family home.

Posted by

Todd Clark (broker w/ Ken's Home Team)
Keller Williams Realty
Phone: (503)524-9494
Fax: (503)746-9573




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 I am a licensed Realtor who specializes in Washington County, Oregon and also work in both Clackamas and Multnomah Counties including the cities of Aloha, Beaverton, Canby, Clackamas, Gladstone, Gresham, Happy Valley, Hillsboro, Milwaukie, Oregon City, Sherwood and Tigard. All information contained in these posts are copyrighted and cannot be used without prior written approval authorization from the author me Todd Clark. If you are looking for an outstanding agent please give me a call I would love to help you with all your real estate needs.


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Comments 12 New Comment

Marte Cliff
your real estate writer
Marte Cliff Copywriting

I like that the banks are now required to refund overages in their escrow accounts. For 3 years I had a Countrywide loan that collected about $100 too much every month. Every year I had to go through a ton of red tape to get the refund.

I think the fact that people don't realize that taxes and insurance affect their payment is a sign of why so many got into ARMs and weren't prepared when they re-set. They just didn't pay attention. They heard what they wanted to hear (low payment) and the rest went in one ear and out the other.

February 20, 2011 05:01 PM
Joe Kenny
Better Than Your Average Joe
Realty Executive Midwest

Good info today Todd.  The taxes here go up despite the value depreciation.  The tax levy's have to remain at 33%.  It's tricky when you the budgets are for the future and the property taxes are in arrears.

February 20, 2011 06:48 PM
Kathryn Maguire
Serving Chesapeake, Norfolk, VA Beach (757) 560-0881

I have had those calls I tell them that before closing. But right now, I think that most people should be checking to make sure that the lender is not putting too much in escrow for taxes.  A lot of areas are seeing decreases due to decreased assessed values.

February 21, 2011 08:30 AM
Todd Clark
Broker - Beaverton, Oregon Real Estate Expert - (503) 524-9494
Keller Williams Realty

Property values seem to go down, yet somehow here the taxes still manage to go up each and every year... How strange is that.

February 21, 2011 06:35 PM
Jim Hale
On the Move for You! - Eugene - Springfield Oregon Real Estate

In Oregon, it is not strange that taxes are going up while values are going down.

Oregon property taxes are not based on real market value.  Assessors annually estimate real market value but they do not base taxes on that number.

They base taxes on "assessed values".  Assessed values can only go up by 3% each year as limited by the amendment to the state constitution passed by voters in 1990.

Despite the boom, today's bust prices are still above those steadily, but slowly increasing assessed values.

February 23, 2011 04:57 AM

Todd Clark

Broker - Beaverton, Oregon Real Estate Expert - (503) 524-9494
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Helping Families Home is a blog set up to help families find that perfect home for them. I have a family and I understand how hard it can be to find a home that everyone is happy with. Let me help you find that home and help your family home.

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