This is 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. A safe option is a fixed-rate mortgage that never changes over the life of the loan. Even so, your monthly payment can change in other ways.
If you put less than 20 percent of your home’s purchase price as a down payment, lenders will require that you pay for private mortgage insurance (PMI). Expect your payments to rise by 0.3 percent to 1.2 percent of the loan amount. In some cases, PMI can be removed after a given period, so ask your lender how to do so.
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 your lender to add to your escrow.
Your property tax authority will 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.
Talk to one of our mortgage brokers at Prosperity Home Mortgage in Portland and SW Washington, the Seattle area, or Southern Oregon today to find the best mortgage option for your situation.
