AFTER buying his dream home and securing low mortgage payments, one homeowner was shocked when the rate increased by $1,500 after just 13 months.
Buying a home is a huge expense that also has several smaller fees attached to it.
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When Gilberto (@gilgra2024) bought his new construction home in 2020, he thought he was doing everything right.
On a TikTokhe explained that his mortgage was only $1,907, which he was excited about.
“Of course, we invested a certain amount of money to ensure that our payment did not exceed $2,000,” he said.
The average rent for an apartment in Dallas is $1,800, and he was proud to pay less than that on his mortgage, he said.
Gilbert’s interest rate was just 2.9%, a staggering difference from the current rate of 5.25% to 5.5%.
He did not expect any setbacks because several family members had purchased new construction homes, which seemed very easy.
He said he was “broke but happy” when he finally closed on the house, but then realized he would have to buy all the appliances for the new construction.
After these expenses, he was sitting beautifully and enjoying his new home.
A year passed, and Gilbert received a shocking notice in the mail about an increase in her property taxes.
“I wasn’t traveling because I was like, we have a storage unit, right?” he said.
“Then I get a message from the mortgage lender that our escrow account is negative and there will be an increase in our mortgage by over $1,500…or you can pay that $11,800 as a lump sum payment.
“I said, no way, you guys can have the house back.”
Escrow accounts are created to help homeowners cover insurance, property taxes, and other home-related expenses.
While the house was being built, the county only charged taxes on the vacant property.
After the house was built, property taxes increased and drained Gilbert’s escrow account.
“Let me explain it to you from my exact situation,” he said in a follow-up video.
“When we purchased our house for $1,907, property taxes were based on $68,000, which was the value of the land at the time. The county charged taxes only for the land.
“When you buy the house, a year passes and now the municipality has records of the improvements that were made to the land.
“So not only do you have the cost of the land, but now you also have the cost of the house built.”
The cost of the land increased to $79,000 with the addition of the $396,000 Gilbert house.
He urged new construction owners to check their county records to see if there are any improvements noted so they can begin preparing for a rise in mortgages.
“Be ready,” he warned.
Lien and Mortgage Increases Explained
What is a deposit? Why did my mortgage payment go up?
Escrow accounts are created to help homeowners cover insurance, property taxes, or other home-related expenses.
If you have a deposit, part of your monthly mortgage payment goes into the account.
The escrow management company then uses the money in the escrow account to pay taxes and insurance when those payments are due.
Essentially, escrow bundles these other charges with your monthly principal payments, making them easier to manage. The goal is to make homeowners less likely to default on payments.
If the government’s annual assessment of your home determines that property taxes will increase, escrow payments may also increase, meaning even those with fixed mortgage payments could end up shelling out more money every month.
DOMESTIC HELP
On the other hand, low mortgage rates can also make homeowners feel trapped.
An Oregon couple wanted to move to a home that better suited their growing family, but felt they couldn’t give up their low mortgage.
Amanda said she and her husband felt as if they were tied to the house by “golden handcuffs.”
She and her husband, Drew, purchased their home in early 2021 and were only able to afford it because of the low 3.5% interest rate they got for a long-term fixed-rate deal, according to Realtor.com.
“It felt like a now or never moment,” Amanda said.
“Lower rates equal more purchasing power.
Now that they have a child, they are thinking about moving back to Amanda’s hometown of Chicago, but they feel like they can’t because of the drastic rise in interest rates.
“Our current situation is very good, but I don’t see a viable path forward from here,” Amanda said.
“I feel trapped here.”
The couple is “afraid” of losing their incredible mortgage rate and even considered renting out their current home to buy an apartment in Chicago.
Nancy Farrington found herself in a similar situation, fearing she wouldn’t be able to sell her condo and move due to high fees.
Another young couple bought their dream home for $600,000, but due to a raise, they’re upside down.
This story originally appeared on The-sun.com read the full story
