Insurance And Property
Taxes: Should You Add Them To Your Mortgage Payment?
When you buy a home, the
mortgage payment isn't the only regular expense you will have to consider. You will also be responsible for paying for
your homeowner's insurance policy as well as the property taxes on your new
home. There are two ways to go about
this. One is to roll them both into your
mortgage payment, and pay them monthly along with your mortgage. The other is to pay them on your own.
Larger Monthly Payments
Adding your insurance and
property taxes to that monthly mortgage payment bill means that you will have a
higher monthly payment. If you are
already cutting it close on your monthly budget with the mortgage alone, this
could make it tougher. You should keep
these two payments in mind when you make up your home buying budget so that you
know what you can really afford after paying both of these monthly expenses.
Lump Sum Payments
Both property taxes and
homeowner's insurance can be paid on their own directly. This is usually either a yearly payment of a
large lump sum or a different sort of payment plan set up by the insurance
company or the county. Coming up with
all of that money at once can be tough, so many people opt for payment plans
instead.
Simplifying Your Life
Most people choose to roll
the payments into the mortgage because it is much simpler. You have fewer monthly payments to think
about and don't have to come up with any large lump sums. Even if you pay them on your own, in most
cases it still winds up being a monthly payment, so it generally makes sense to
combine it with the mortgage payment and have a lot less to think about each
month.
The person handling your
mortgage can help you decide what to do about insurance and property
taxes. Usually, the first year's
insurance will be part of the closing costs on your home, since you have to
have insurance in place in order to get funding for a mortgage. Whether or not property taxes are due will
likely depend on when they were last paid on that home. After the initial payment, you can add them
to the mortgage payment and not have to think about it again.
