Recently, many homeowners have seen big increases in their property taxes and insurance costs. This means higher monthly housing bills. Between 2021 and 2024, the average cost of homeowners insurance went up more than 24%. In some states, like Illinois, it went up by more than 50%. At the same time, rising home prices and local government spending have caused property tax bills to increase by more than 27% since 2019, according to CoreLogic, a property analytics and technology firm.
For SUN clients, remember that your monthly payment includes your mortgage, homeowners insurance and property taxes. And if you live in a condo or have a homeowners association, your condo or HOA fees will also be included. So, your monthly mortgage loan payment stays the same (each month you pay back a portion of your loan (principal) and pay interest), but the other costs can go up (or down). These costs are set by your insurance company, your city or town, or your condo or homeowner’s association—not by SUN.
It’s important to understand why these costs change, how they affect your escrow account (the account where these fees are deposited into), and what you can do to stay informed.
Property Taxes: Why They Rise and What You Can Do
Property taxes pay for local (city or town) services like schools, roads and emergency help. These taxes are based on two things: 1) how much your home is worth and 2) what your local tax rate is. In 2024, tax bills went up in many places. Some of the states SUN serves—like New Jersey, Illinois and Connecticut—have some of the highest tax rates in the country. For example, homeowners in New Jersey pay over 2% of their home’s value in taxes each year, which adds up to more than $9,400 for many families.
One reason your taxes might go up is a reassessment. That’s when your city or town updates how much your home is worth. If your home value goes up, your taxes might, too. Some places reassess homes every year. Others do it every few years. For example, Massachusetts reassesses every year. Ohio reassesses about every six years. Most other states fall somewhere in between. You can check how often your town does this using this guide from The Tax Foundation. Some homeowners may also qualify for tax relief programs, such as exemptions for seniors, veterans or income-based discounts. Call your town or city’s tax department to find out if you qualify for an exemption and how to apply.
Insurance Costs Are Going Up
Homeowners insurance is getting more expensive across the country. Storms, floods, wildfires, inflation and higher rebuilding costs are driving up costs. According to Kiplinger, climate-related damage is now a major reason insurance is rising.
In 2024, the average annual cost of homeowners insurance was about $2,377, or nearly $200 per month. Many states, including some served by SUN, saw even larger increases. In Connecticut, homeowners insurance rates shot up 13.5% in 2024, according to Connecticut Insurance Department data published earlier this year.
Because insurance costs are increasing, your monthly mortgage payment may be affected. SUN's mortgage servicer, Dovenmuehle Mortgage, Inc. (DMI) collects money each month to cover taxes and insurance. If your insurance premium goes up, the amount you have to pay may also increase—even as your mortgage loan payment stays the same. For example:
- $1,500 – your mortgage loan repayment
- $200 – your monthly property insurance
- $500 – your monthly property tax
- $2,200 – total monthly mortgage payment
The Impact on Your Escrow Account
Your escrow account holds the money needed to pay your homeowners insurance, property taxes and, if needed, condo fees. This account is managed by your mortgage loan servicer. For SUN clients, that is Dovenmuehle Mortgage, Inc (DMI).
Each month, part of your payment goes into separate escrow accounts. This money is saved to pay your future tax and insurance bills when they are due. The amount you pay into these accounts is based on how much those bills are expected to be.
If your taxes or insurance costs go up, your escrow payments will also go up. This means your total monthly mortgage bill may increase, too.
It is important to read your escrow account statements and understand any changes. This will help you manage your monthly housing costs.
Proactive Steps to Manage Rising Costs
- Open Your Mail
Always open and read any mail from your town, insurance company, or mortgage loan servicer. These letters often contain important updates about your property taxes or insurance.
If you are a SUN client, your mortgage loan servicer, DMI, regularly reviews your escrow accounts. If your monthly payment is changing, they will send you a letter explaining why. Reading these notices helps you stay informed and avoid surprises.
- Understand Your Bill
Take time to review your monthly mortgage statement, especially the taxes and insurance. Knowing what you are being charged for can help you spot any errors or unexpected increases. If you don’t understand something, contact your city or town or insurance company and ask for help.
- Shop Around for Insurance
Homeowners insurance costs can vary! Compare prices from different companies to see if you can get a better deal. Unlike auto insurance, you can usually only change your homeowners insurance when the premium is up for renewal—so be sure to keep track of when that occurs.
- Use insurance comparison websites to evaluate options.
- If you're an AARP member, check for homeowners insurance discounts.
- Bundle your auto and home insurance if possible. Many insurers offer average bundling discounts of around 20%.
- Appeal Your Property Tax Assessment
If you think your home was valued too high, you may be able to appeal the property tax assessment (the valuation your town or city has placed on your home).
Contact your local tax office or visit their website to learn about the process and deadlines. You can often find this information by searching for “property tax appeal” along with the name of your city or town.
Leveraging Your Capital Reserve Account for Significant Expenses
Some BlueHub SUN mortgages include a Capital Reserve Account, a special fund meant to help cover surprise housing expenses. You have a Capital Reserve Account if you pay your mortgage biweekly or if you repurchased your home through SUN.
This is your money, and you can access it when needed. It can help with unexpected home costs, like replacing a water heater or repairing a roof. The funds may also be used to cover a mortgage payment if something unexpected happens, like job loss or illness. In some cases, it can be applied to a past due balance before late fees are charged.
You may also be able to use this account to help cover an escrow shortage, depending on your loan terms.
If you're not sure whether you have a Capital Reserve Account, please contact us at 855.604.HOME or info@sunhomehelp.org.
