When a Reddit user and their husband bought a home in 2021, they felt confident with their $1,250 monthly mortgage payment. It was a fixed-rate loan, and they had budgeted carefully. But that confidence quickly turned to confusion when their payment jumped to $1,600.
Insurance And Property Taxes Are the Real Culprits
At first, the couple thought their private mortgage insurance had increased. “We've been in contact with our lender and they said the only way to get off the PMI is to get a home appraisal above $331K,” the person wrote in the r/FirstTimeHomeBuyer subreddit recently. So, her husband paid $500 for an appraisal that did meet the target value. But the lender said it was invalid because the appraiser wasn't on their approved list. They were told they'd need to pay $650 for another appraisal through the lender's channels.
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Redditors were quick to point out what was really going on. “Your PMI does not go up. Only your escrow for insurance and taxes can go up,” one top commenter said. Another added, “Interagency appraisal guidelines prohibit financial institutions from using appraisals ordered directly by the borrower.”
The original poster later confirmed what many had suspected: “I asked our mortgage lender to send our last few escrow reports and it was in fact our hazard insurance causing the increase, not our PMI like we originally thought.”
The takeaway was this: even with a fixed interest rate, escrow payments can shift drastically because of tax reassessments and insurance hikes. “Be prepared for your escrow—property taxes and insurance—to go up even if you got a ‘fixed rate' mortgage,” the OP warned.
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Escrow Surprises Are Common
Many commenters shared similar stories. One person said their mortgage payment rose by $800 due to an insurance lapse and property tax increase. Others explained how taxes often spike after a property changes hands, since previous owners may have had exemptions or lower assessments.
“My homeowners insurance went from $1,400 to $2,800 over a three-year span,” one person said. “I shopped and found insurance with the same coverage for $1,300 again, only to be told they wouldn't cover the house due to them feeling the roof was old. I was forced to spend $12,000 for a new roof in 30 days.”
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What First-Time Buyers Can Do
The good news is that there are options. Homeowners can shop around for better insurance rates, dispute property tax assessments, and ask lenders for a broker price opinion instead of a full appraisal to remove PMI.
“I requested the PMI to be removed and was given two options,” one person explained. “I went with the BPO and it was only $140. Ten days later, my PMI was removed.”
Others suggested reviewing escrow statements annually and proactively paying shortages to avoid ballooning payments. “If you pay the $1200 shortfall, you will owe $100 more a month. If you don’t pay it off all at once, you will owe $200 more a month because you’re paying the shortfall plus the extra $100 monthly,” one commenter warned.
As for the original poster, she ended the thread with a lesson for others: “As much as some people like to act like home buying and everything involved is intuitive and common sense, it’s really not. So I hope you all can learn from our boo boo.”
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