One of the most common questions Florida homeowners ask is why their mortgage payment changed when their interest rate did not. The answer is usually escrow. Understanding how it works helps you budget with fewer surprises, whether you are about to buy or have owned your home for years.
What Is an Escrow Account?
Your monthly mortgage payment often has more than two parts. Principal and interest repay the loan. The rest can include property taxes and homeowners insurance, which your lender collects each month and holds in an escrow account, then pays on your behalf when those bills are due. Some borrowers can choose to pay taxes and insurance on their own, depending on the loan and lender requirements.
Why Your Payment Can Change
Each year your servicer reviews your escrow account, comparing what was collected with what was actually paid. If insurance premiums or property taxes rose, your monthly escrow amount may go up, and you may see a shortage that needs to be spread over the coming months. If they fell, you could receive a refund or a lower payment.
Florida Insurance and Your Budget
Homeowners insurance is a major part of the cost of owning in Florida, and premiums can change from year to year. It is smart to review your coverage annually, compare quotes from more than one carrier, and ask your insurance agent about discounts for wind mitigation features. Flood insurance, which is separate from homeowners coverage, may be required depending on the property's flood zone.
Property Taxes After a Purchase
When you buy a home, the property may be reassessed at a value closer to your purchase price, which can change the tax bill compared with what the prior owner paid. If the home will be your primary residence, ask about applying for Florida's homestead exemption, which has a filing deadline early in the year. Your county property appraiser can explain how it works.
Plan Before You Buy
When you are shopping, ask your loan officer to estimate taxes and insurance for each home you consider, not just the mortgage itself. Real quotes give you a much better view of your monthly cost. Read more in our guide to homeowners insurance and your Florida mortgage payment, or call Josh and Anna Richardson at (727) 888-6650.
This article is general information, not financial, tax or insurance advice. Escrow amounts, insurance costs and property taxes vary by property, lender and time. Your Home Loan Team, NMLS #2072896. Josh Richardson, NMLS #2448184.
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