First year payment lower than subsequent years?

[avv7c0]

This is our first mortgage (FHA 30-year fixed), which we will close on in October. I've been told that our first year's monthly payment will be lower than subsequent years. But I am unsure how much this will be. We plan to pay the regular amount regardless to get a head start on some equity. But in order to plug in this "extra" amount into the online calculators, I need to know how much it will be.

The components of our monthly payment are:

P&I: $1592

Taxes: $396

Insurance: $104

Mortgage Insurance: $350

We'll have the escrow account set up for taxes/insurance ($3282), as well as paying the first year's hazard insurance up front ($1248). Upfront MIP will be wrapped into loan. So where does that leave us for year 1?

Thanks!

[MarineVietVet]

What they are talking about is a possible increase in your payments each year. Every mortgage (at least in my experience) goes through an escrow analysis once a year. By law there has to be a minumum amount kept in escrow.

If there is a shortage (caused by an increase in your taxes or insurance, etc.) then the payments have to be raised to maintain that minimum escrow balance.

I don't think I explained that very well. That's why I comment very little in Mortgage Loans.   

[seemund]

If the property's value increase, your taxes go up, which equals to ==  your payment goes up.

[pizzadude]

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@seemund wrote:

If the property's value increase, your taxes go up, which equals to ==  your payment goes up.

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Strangely enough, taxes seem to also go up when values decrease..     

So yes, as the others have mentioned, your escrow amounts, and hence your payments, will likely increase each year to account for increased taxes & insurance premiums.

[JusdoNit]

+1

[tooleman694]

When I bought my first home they had escrow all wrong and I was short for taxes. The bank covered it and added like 400 more a month for the whole year to cover it.

[indecison]

+1 for what toolman just mentioned. On my first house it was a new build and when they estimated the taxes it was on an unimproved lot. The first year estimate was estimated without a house on it. My second year taxes made my payment go up by over $400 per month. It hurt!