When most people think about mortgage affordability, interest rates dominate the conversation. But here’s the truth: your monthly mortgage payment isn’t just principal and interest—it includes escrow items like property taxes and homeowners insurance. These two factors can shift your budget more than you realize and understanding them is key to staying in control.
Recent data shows the typical U.S. mortgage payment hovering near $2,800–$2,807 this spring. Yet focusing only on principal and interest hides the bigger story: taxes and insurance are shaping affordability in ways that matter for every homeowner.
Property Taxes: A Cost and a Built In Advantage
Yes, property taxes have been rising nationwide. ATTOM’s latest reading shows the average single‑family tax bill rose ~5.8% in 2024 to about $4,300. Rising valuations mean more communities are investing in schools, infrastructure, emergency services, and amenities that help protect and enhance home values over time. That’s the overlooked upside: your tax dollars are often reinvested locally in ways that support your property’s long‑run value.
Even better, property taxes can deliver personal financial advantages:
- Potential federal tax deduction.
- Exemptions and caps that lower your bill.
- Transparency for smarter budgeting.
Homeowners Insurance: Protect First, Then Optimize
Homeowners insurance is the second half of escrow, and it’s more than a bill; it’s risk transfer that protects your largest asset and your financial plan. Premiums have been rising (nearly half of U.S. homeowners saw an increase in the last year per J.D. Power), but you have more levers than you might think:
- Coverage fit: Align dwelling limits and endorsements to the real replacement cost, not just the purchase price. Right‑sizing prevents over‑paying and under‑insuring.
- Bundling and shopping: Combining home and auto or exploring multiple A‑rated carriers often yields meaningful savings without sacrificing coverage quality.
- Claims strategy: Staying claims‑conscious (handling small losses out of pocket when appropriate) can help keep long‑term premiums in check.
Because insurance is escrowed, any premium change flows directly into your monthly payment. That’s why a coverage review before renewal is one of the simplest ways to keep your monthly payment stable.
Beware the monthly cost myth
A common pitfall is anchoring on principal and interest and treating escrow as an afterthought. In reality, taxes and insurance can add hundreds of dollars to a monthly mortgage payment. But this isn’t a reason to worry, it’s a call to plan:
- Model your all‑in monthly payment at the pre‑approval stage, including realistic taxes (with exemptions) and a current insurance quote.
- Maintain a small escrow cushion to absorb annual adjustments without straining cash flow.
- Set calendar reminders to review your homestead/other exemptions and your insurance shopping window.
When you plan escrow the same way you plan your rate, you turn a potential source of surprises into a source of control.
Mortgage Stability: What Really Matters Right Now
Industry watchers note that overall mortgage delinquencies remain relatively low by historical standards, even as serious delinquencies have ticked up at the margins. The takeaway for homeowners is encouraging: budget resilience, built through accurate taxes, optimized insurance, and a clear view of your monthly payment goes a long way toward keeping you comfortably current, even if market conditions shift.
Think of it this way: your interest rate sets the frame; escrow finishes the picture.
Practical Moves to Regain Control (How SWBC Mortgage Helps)
- Run a complete escrow checkup so you see your true all-in monthly cost—and how it could change.
- Review your homeowners insurance across strong carriers to balance coverage and cost, identify discounts, and right-size deductibles.
- Because property taxes ride on assessed value, accuracy is everything. Be sure to double-check your assessed value.
Ready for a No‑Obligation, All-In Cost Review?
Mortgage affordability isn’t defined by rates alone. Property taxes and homeowners' insurance can be proactive advantages, helping you qualify confidently, protect your investment, and keep monthly costs predictable year after year. With smart modeling, timely exemptions, and an optimized coverage strategy, you can stabilize your payment and keep your budget resilient, no matter what next year’s valuation or renewal brings.
SWBC Mortgage is here to help you harness escrow to your advantage so your mortgage payment works for you, today and tomorrow. Let’s protect your home and your cash flow.