[JOE AGENT] with Berkshire Hathaway HomeServices PenFed Realty Texas back this month with another super useful topic to share with all my potential homebuyers. Today, I'm talking about all the ways your monthly home payments can change.
This is honestly one of the best times to get a fixed-rate mortgage. Since interest rates have hovered near record lows for years, they’re bound to go up rather than further down.
You could get lower mortgage payments temporarily with an adjustable-rate mortgage or hybrid loan that employs a fixed rate for five years or so and adjusts to market rates when the fixed term expires, but your payment could reset to a much higher and less affordable interest rate in the future.
A far safer option is the fixed-rate mortgage with a rate that never changes over the life of the loan. Even so, your monthly payment can change in other ways.
For instance, if you put less than 20% of your home’s purchase price as a down payment, lenders will require that you pay for PMI, private mortgage insurance. Expect your payments to rise by 0.3 percent to 1.2 percent of the loan amount. In some cases, PMI can be removed.
Your monthly payments should include escrows for hazard insurance. The amounts can change, so monitor your annual insurance statements from your insurer when it’s time to renew. Your lender will divide the annual amount into monthly payments for them to add to your escrow.
Your property tax authority will also send you a new statement annually, usually in the spring or early summer. Your tax basis will be based on the purchase price you paid. Most communities place annual limits on increases to avoid homeowner sticker shock. I always make sure my recent homebuyers know the importance of filing their Homestead Exemptions so they can avoid a huge tax bill.
There are so many things to know about when buying your first home or any home for that matter. Allow me to be your local Real Estate guide and expert. If you have any questions feel free to call or text me at _____ or simply shoot me a message anytime. I'm here for you.
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