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.