How Homeowners Insurance Affects Your Mortgage Payment

When people think about their mortgage payment, they usually focus on the loan itself.

However, one of the biggest factors affecting your monthly payment is homeowners insurance.

Your Mortgage Payment Is More Than Principal and Interest

Most homeowners pay what is known as PITI:

• Principal

• Interest

• Taxes

• Insurance

If your insurance premium increases, your mortgage company must collect more money through escrow to cover the higher cost.

That means your monthly payment increases even though your interest rate stays the same.

Why Are Insurance Premiums Rising?

Premiums can increase because of:

• Rising construction costs

• More expensive claims

• Severe weather events

• Changes in replacement costs

• Claims history

Texas homeowners have seen insurance costs rise substantially over the past several years, although the pace of rate increases has slowed recently.

Should You Shop Your Insurance?

Absolutely.

Many homeowners renew automatically without comparing rates.

Shopping your homeowners insurance each year may help you find comparable coverage at a better price, which can reduce future escrow increases.