Mortgage increased April 2021? Tax increase? Anyone else?

[Ryan Mackereth]

Hi there everyone!

Do mortgages with escrow built in just increase randomly? Is it due to increased taxes?

My wife and I had our mortgage increase by quite a bit this month, due to unanticipated escrow increases. I am interested if anyone else had a mortgage increase this year on their investment property? I am trying to understand this better so to plan better for the future. I will discuss our situation, but wanted to open this up to others to comment if they have had a similar experience, and how you plan on handling it going forward.

We have and investment property in Michigan that we have had for 2 years now. It is a SFR with a 15yr fixed mortgage, including escrow (tax/insurance/other costs), of $750/month. We were informed that it would increase to $930/month this April, which was to be the new monthly payment. After calling PNC to discuss the increase, they said that they underestimated the property tax by about $1800 last year, and need to spread it over this coming year, as well as increase the current estimated escrow for tax, which caused our new monthly increase of about $180/month. So I was curious how and why this happened, and I have a few theories as to why the increase happened. I went to the county assessors site and found that my assessed land value increased from $24k to $40k. Also, I listed the property for sale earlier this year, which I have since then taken down and plan to relist in a couple months, but on all the real estate sites its previous estimated value was around $95k, and after listing the property its estimated value on these sites is around $130-140k. Do either of these increases have anything to do with our mortgage increase?

I have a few questions for the Bigger Pockets community, as this mortgage increase was a shock to me, and I am trying to navigate how to manage this risk for the future of this property and future properties. Here are my questions.

1. I was under the assumption that my monthly mortgage stays the same rate throughout the life of the loan. Is that not true? Can the monthly payment increase when property tax increases, and if so, how should one calculate this increase in cost when analyzing a deal? 

2. Since my mortgage company is spreading the underestimated tax out over this year, I estimate that my monthly mortgage decrease next year, and would now include a slight adjustment for the increase in property tax? So for example, my original payment was $750, after next year it may be $800? 

3. Could my monthly mortgage go up by $100-200 each year due to increased property value? 

4. If I am to expect large increase in monthly mortgage for years to come, why haven't I heard people talk of this when estimating costs of owning real estate?


Maybe there is a simple answer, or something that I am missing here. I have never seen such a large increase the mortgage, and I can't remember seeing this with past mortgages, so hoping that some of you may be able to shed some light on this topic to help others and myself who are found in this situation. 

Thank you!

- Ryan