A First-Time Buyer Was Shocked When Their Escrow Shot Up. Turns Out, A Fixed Rate Doesn't Protect You From Tax And Insurance Hikes

Adrian Volenik

Sat, Jun 21, 2025, 1:01 PM 4 min read

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When a Reddit user and their husband bought a home in 2021, they felt confident with their $1,250 monthly mortgage payment. It was a fixed-rate loan, and they had budgeted carefully. But that confidence quickly turned to confusion when their payment jumped to $1,600.

At first, the couple thought their private mortgage insurance had increased. “We've been in contact with our lender and they said the only way to get off the PMI is to get a home appraisal above $331K,” the person wrote in the r/FirstTimeHomeBuyer subreddit recently. So, her husband paid $500 for an appraisal that did meet the target value. But the lender said it was invalid because the appraiser wasn't on their approved list. They were told they'd need to pay $650 for another appraisal through the lender's channels.

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Redditors were quick to point out what was really going on. “Your PMI does not go up. Only your escrow for insurance and taxes can go up,” one top commenter said. Another added, “Interagency appraisal guidelines prohibit financial institutions from using appraisals ordered directly by the borrower.”

The original poster later confirmed what many had suspected: “I asked our mortgage lender to send our last few escrow reports and it was in fact our hazard insurance causing the increase, not our PMI like we originally thought.”

The takeaway was this: even with a fixed interest rate, escrow payments can shift drastically because of tax reassessments and insurance hikes. “Be prepared for your escrow—property taxes and insurance—to go up even if you got a ‘fixed rate' mortgage,” the OP warned.

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Many commenters shared similar stories. One person said their mortgage payment rose by $800 due to an insurance lapse and property tax increase. Others explained how taxes often spike after a property changes hands, since previous owners may have had exemptions or lower assessments.