HOMEOWNERS have been flocking to TikTok to share their stories of surprise mortgage payment hikes.
One real estate broker and influencer took to social media to explain the trend.
Matt Weatley is a broker in central Florida who shared his home payment advice with other frustrated TikTokers.
He said the confusion is understandable as many people were never told about the possibility of their mortgage payment spiking.
“Nobody’s teaching you this stuff,” he said in a video.
His video started by sharing a rant by another Floridian who said his mortgage went from $2,300 to $3,500.
Wheatley interrupted and explained how such a drastic hike can happen.
ESCROW FOE
The reason for such a large increase in payments was likely due to an escrow underpayment, Wheatley said.
He explained that fixed mortgage rates, which are meant to remain stable, can still change.
This is often due to property taxes and insurance, payments that typically are managed through an escrow.
When tax assessments mean you need to pay a higher property tax rate, your payments can increase.
However, it’s not just that year’s payments.
Because tax valuations typically happen annually, they may apply retroactively.
These charges can apply to a full year’s worth of payments on top of the new payment.
“You’ve got the current year and the past year you have to make up for,” Wheatley explained.
He said that often, mortgage payments go back down after a year of paying extra.
He estimated that his fellow Floridian TikToker’s $3,500 payments will likely drop back to $2,800 after a year.
Escrow and mortgage increases explained
What’s an escrow? Why did my mortgage payment go up?
Escrow accounts are set up to help homeowners cover insurance, property taxes, or other home-related expenses.
If you have an escrow, part of your monthly mortgage payment goes towards the account.
The escrow management company then uses the money in the escrow account to pay for taxes and insurance when those payments come due.
Essentially, the escrow bundles these other charges with your monthly principal payments, making them easier to manage. This is meant to make homeowners less likely to default on their payments.
If the government’s annual valuation of your home determines that your property taxes will go up, the escrow payments can spike as well, meaning that even those with fixed mortgage payments can find themselves forking over more cash every month.
MORTGAGE MELTDOWN
Several other people have taken to the internet to complain about their mortgage payments in recent months.
One said she was “bamboozled” by her property taxes.
In her case, her new-build home saw a major property tax increase,
While she initially was paying taxes only on the land, after the house was finished she was taxed on both the land and the home.
Another new-build home owner said his payments went up by $3,000.
Others have said they feel “stuck in golden handcuffs” after securing low interest rates.
One financial advisor shared tips to get out of those golden handcuff traps.
This article was originally published by a www.the-sun.com . Read the Original article here. .