How does a fixed mortgage work with property taxes increasing?

Question by chica24: How does a fixed mortgage work with property taxes increasing?
Does your monthly mortgage rate stay the same over the years while taxes keep increasing? Or does it still increase your monthly mortgage payment and end up being risky with how high it can become?

Thanks!

Best answer:

Answer by Judy
Your interest % stays the same for the length of the mortgage. If property taxes go up though, the escrow portion of your payment goes up.

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4 Comments → “How does a fixed mortgage work with property taxes increasing?”


  1. george 2

    Nov 21, 2013

    when your escrow account is behind or getting low because of higher taxes the bank will bill you for x amount of dollars to help cover it.


  2. M W

    Nov 21, 2013

    If your payment includes an escrow amount for property taxes, it will increase according to the annual increase in the tax paid. Your mortgage interest rate remains the same throughout the length of the mortgage term.

    Most municipalities have tax caps, so the tax bill can’t skyrocket in a single year. Assessed values can increase, but due to recent downturns in the real estate market, those have remained steady.

    When you reach a certain level of equity, some lenders will stop requiring the tax escrow and you will become liable to pay it on your own.

    Whatever the annual tax increase is, it will be divided by 12, so each month’s increase isn’t a substantial amount.


  3. the kid

    Nov 21, 2013

    Your monthly payment is not fixed. Your interest rate is. The payment will change from year to year with changes in property tax and insurance.


  4. acermill

    Nov 21, 2013

    The payment amount for the principal and interest for the mortgage will remain the same. The escrow portion of the payment will increase as needed to cover increases in taxes and insurances.


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