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Researching the mortgage bill increase

August 1st, 2016 at 07:50 pm

A couple months ago we got the unwelcome news that our monthly mortgage payment was increasing from $2,789.40 to $3,101.94, effective Aug. 1 (today). That's $312.54 per month! It more than wipes out my and NT's raises this year, which is a big bummer.

We got the notice a few weeks before our Europe vacation and I just couldn't be bothered to look into it at all. I knew from the letter that part of the increase was to make up for an escrow shortage and the rest was to increase our escrow for the future. So the first part of the increase will be temporary (about a year I believe).

So anyway, I'm looking into it now that the higher amount has hit our checking account for the first time.

I looked at our insurance, and it went up from $3,791.88 per year to $4,324.57 per year. It seems this is due to higher valuation of everything. I'm not sure if I can do anything about that; as I recall this was the best deal we could find. Apparently you can save quite a bit if you bundle home with car, but we don't have a car, so that wasn't an option. But I don't know, I may go ahead and sign up for a "Farmer's friendly whatever" to see if there's any way to lower this bill.

Then I checked county property taxes, and they increased from $4,943.56 per year to $5,230.26 per year. Obviously, nothing I can do about that one. They actually value the home way lower than its market value.

Together, these two increases come to about $68.28 per month. Leaving $244.26 of my mortgage payment increase unaccounted for.

I don't have the letter with me at work, so I'm going to check it when I get home to see if that's the temporary increase part of it, or if there's something else contributing to this giant leap.

19 Responses to “Researching the mortgage bill increase”

  1. Jenn Says:
    1470081887

    Ouch! That's a LOT of money. I know things vary from region to region, but still - I'd shop that insurance if I were you.

  2. ceejay74 Says:
    1470082135

    Isn't it?!? When we lived in the condo, our insurance was about $240 per year. Of course our building association covered structure insurance, so it was just for our unit, but still...was not expecting a 1700% increase when I moved from a condo to a duplex!

  3. ceejay74 Says:
    1470083961

    I wonder if I have more coverage than necessary. Is this normal for an owner occupied duplex valued about $500K?
    Package - Cvg A - Dwelling $720,000
    Package - Cov B - Separate Structures $72,000
    Package - Cov C - Personal Property $540,000
    Package - Cov D - Loss Of Use $288,000
    Package - Cov E - Personal Liability $1,000,000
    Package - Cov F - Guest Medical $1,000
    Extended Replacement Cost 125%
    Identity Fraud Expense $30,000
    Building Ordinance Or Law Coverage 10%
    Sewer & Drain Damage - Higher Limits $10,000

  4. Kiki Says:
    1470086074

    Would question the seperate strusturws, personal property amounts.

    Is it because it is a duplex? Do your tenants have renters insurance? With my room mate because i made her get renters insurance my house insurance dropped by $30.

    Ask them for a complete break down of what it costs.

    Do you have a good agent or ahopping online? Might be worth looking at an insurance broker?

  5. ceejay74 Says:
    1470087066

    I think the separate structure coverage is for the detached 2 car garage with loft storage room...

    I just looked around at what duplex coverage usually entails; if it's owner occupied they typically do a single-home coverage but the personal property coverage is only for the owner unit; the tenants are required to have rental insurance for their property.

    I'm going to ask him about the parts you mentioned. He also got back to me about a "new program" where replacement value is $680K; going to ask what that means.

  6. AnotherReader Says:
    1470091370

    What company are you with? The personal property is ridiculous. Loss of use is high, even if it includes loss of rent. Liability looks reasonable. What is the estimated cost to replace the structure and contents per square foot?

    I would shop the policy with State Farm, Farmers, and a few other large highly rated companies. Also look at your deductible. You are not going to make a claim for $500 or a similarly small amount, so think about a $2,000 deductible if your lender will permit it.

    I would not bundle identity theft insurance with homeowner's insurance, especially if it's expensive.

    A broker may be able to help, but you need to be careful about the insurance company providing the coverage. It needs to be strong financially and provide good claims service. It has to be acceptable to your lender as well.

    Your tenants need renter's insurance. Given how flaky their financial lives are, you might have trouble convincing them of that. Renter's insurance protects both of you, and most multi-unit landlord policies require it now.

  7. creditcardfree Says:
    1470094303

    I agree you need to shop around and consider increasing your deductible...well if you at least have that amount set aside for an emergency.

  8. ceejay74 Says:
    1470095651

    My deductible is $2500...does that seem like a good amount?

    Here's what the agent says in his latest email:
    The new program develops the replacement, you would maintain the extended
    replacement cost.
    Personal property covers everything in the house that is not part of the
    structure, furniture, clothing, appliances, etc.
    Separate structures covers the unattached garage.
    The limits for personal property, separate structures, are percentages of the
    building value. We can increase the limits but cannot lower them.
    The sewer & drain coverage premium is $119.71.
    Farmers offers an additional discount when combining auto insurance.

    So I guess I should ask for a quote at the $680K replacement amount, which should hopefully bring down the personal property and separate structure, and then get comparable quotes from other companies. I do think the main problem is that most people bundle auto, which I cannot do.

  9. ceejay74 Says:
    1470095721

    Oh, and it's Farmer's. They were the lowest of 4 or 5 companies I researched similar coverage with a few years ago when we bought the place. I'll shop around with the amounts I want and see what I can turn up.

  10. Petunia 100 Says:
    1470096401

    I'd get a quote from Geico. And if you do, check to see if the 8% discount for shareholders is good in Minnesota. (It isn't in California). If you're not a shareholder, you can buy one share of Brk.B which closed at $143.93 today. Just one share is all you need, and it can be in an IRA.

  11. Bluebird Says:
    1470105844

    The dwelling coverage might be high, but some carriers establish their own replacement value, you should ask. The personal property is really high. Conduct an inventory of your possessions with estimated values, along with a video of all items, which you should always keep in case of a loss. If your estimate is lower, than adjust your coverage limit.

  12. FrugalTexan75 Says:
    1470106105

    I hope you can find a better deal!

  13. ceejay74 Says:
    1470106451

    He says I can't lower the personal property limit or separate structure coverage because it's a percentage of the home value. I asked if that will go lower if we go with the new lower replacement value of $680K. Maybe some other places won't have the personal property amount tied to home value like that?

    I know for sure our stuff isn't worth half a million. Maybe $100K if we had to replace everything brand new including kitchen and bathroom appliances.

  14. Bluebird Says:
    1470107480

    Our carrier, a large regional company, allows us to decide the value of our personal property. You may want to get some other quotes. Also, don't lower your personal liability of $1,000,000. Actually, you may want to look into an umbrella policy for additional liability coverage of $1,000,000 especially being a landlord, just my opinion.

  15. Kiki Says:
    1470108507

    The personal property may also mean floor coverings and finishes if the house was to be damaged. They are not considered part of the structure of building a home, at least that is what i learned when researching insurances.

  16. ceejay74 Says:
    1470109015

    Most places aren't giving instant quotes when I enter my info, but I tried State Farm and it gave me $4209. So maybe $10 per month better? It wouldn't allow me to lower personal property below $525K either. I've asked my Farmers guy for a new quote based on the lower replacement value. We'll see what he says.

  17. ceejay74 Says:
    1470110384

    I cannot for the life of me find that letter which explained how much of the increase was temporary to make up for a current escrow shortfall! I contacted the mortgage company via their website to see if they can just tell me.

  18. Bluebird Says:
    1470140068

    Try to find a local independent agent who has multiple carriers to quote through.

  19. crazyliblady Says:
    1471008409

    We get discounts for having a policy for a long time without making a claim and also multi-line discount. Are there any other insurance policies, like maybe life insurance, you could bundle with your home owners insurance.

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