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WHY DID MY HOUSE PAYMENT GO UP?! Part 1

You worked hard (really hard) on your credit to get your FICO score to a level acceptable to the mortgage banking gods.

You shopped banks and mortgage rates to find the best fit for you and your new home. After all, you were only interested in a LOOONG term FIXED INTEREST relationship.
You cut out lattes in the morning and became acquainted with wine in a box in order to build some cash reserves for closing costs and a down payment.

You spent more time researching and touring homes than you did on your social media relationships (gasp).

And then you found it…..THE one. The home in the right price range, in the right area, with the right features, just the right amount of quirkiness to suit your personality – and potential unrivaled by any HGTV fixer upper show.  All the numbers crunched just right-like a bag of fresh Doritos.  The payment is less than you were bleeding for rent! AND YOU CLOSED.  The remodeling Pinterest board is ready and you are checking prices on hardwood flooring like a BOSS.

And then, after months of new home relationship bliss, it happens. You get a notice in the mail from your mortgage company quoting your new (and higher) monthly payment amount.  HOW COULD THIS HAPPEN? There must be a mistake – you chose a LOOOONG term FIXED INTEREST relationship with your lender.  Welcome to the world of PITI. Absolutely NO relation to PITY party, and it’s NOT something you can afford to wallow in right now. Deep breath. Remain calm and PITI on.

PITI STANDS FOR:

Principal – your loan amount divided by the number of payments (360 for a 30 yr. mortgage). This is a fixed amount.

Interest – the interest on each payment determined by the amount of your loan, your rate, and the number of years you are borrowing. With a fixed interest rate, this amount is predetermined based on the life of the loan and the amount you are borrowing.

**(IF you have a fixed rate mortgage, your Principal and Interest payment added together will remain constant throughout the life of the loan. The Principal and Interest is the amount you are actually paying BACK to your mortgage lender. )

Taxes – the Ad Valorem, AKA property taxes on your home calculated by assessment value multiplied times the mill levy.  (Actually – 11.5% of your assessed value for residential properties).

Insurance- the homeowners insurance premium for the year, added into your monthly payment.

So listen closely now to your Realtor therapist. Your lender is not “going out on you”. Your principal and Interest payment have not changed.  That relationship is solid.  It doesn’t take Common Core Math or a private detective to determine what happened to this beautiful formula.  It is either Taxes or Insurance.  Believe me, in this relationship, it’s not YOU-it’s THEM.

We’ll explore how these two necessary evils justify ch-ch-ch-changing after the deal is sealed in Part 2.  You really should stay tuned. Those online Divorce attorneys are of no help to you right now.  The pre-nup does NOT cover this.

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