Property Taxes & Homeowners' Insurance Premiums

Property values have continued to increase across the country. Over the last 5 years in Tennessee, property values have gone up 12% year over year with the average home price increasing from $231,000 in 2019, to $387,000 in 2024.

Depending on your market and your specific county’s timeline for assessing your property value, some may have already seen, or will soon be seeing, a large increase in your property value compared to the original purchase price of your home. This increase in property value can lead to an increase in property taxes if the county maintains the same tax rate.

In addition to property taxes, homeowners’ insurance has seen dramatic increases over the last couple of years. Insurance companies are stating the primary reasons for the increase in insurance is due to an increase in natural disasters in certain areas of the country and an increase in building materials (inflation) making repairs more expensive.

These increases may cause your monthly mortgage payments to increase. Even if you have a fixed-rate mortgage, your payments may change due to your mortgage having an escrow account. Escrow accounts allow homeowners to include their property taxes and homeowners’ insurance in their monthly mortgage payment rather than paying for those items separately. The financial institution that holds your mortgage will estimate how much you'll pay in property taxes and homeowners’ insurance and will spread that out over 12 monthly payments that are added to your mortgage payment. This amount is re-evaluated on an annual basis. If the value of your property has risen over the past year, the cost of your taxes and insurance will also increase, thus raising your mortgage payment.

What can you do to prevent the payment shock?

1. Plan ahead. Begin saving for the increase so you are prepared for a potential increase. If your escrow account is short, consider making a lump sum payment instead of spreading the shortfall over 12 months.
2. Check for exemptions. Ensure you are receiving all applicable property tax exemptions, such as homestead exemptions, senior citizen exemptions, or military service exemptions.
3. Shop for insurance. Review your insurance bill and coverage prior to the renewal. You always have the option to shop around between carriers for better rates. Consider bundling your homeowner’s insurance with other insurance polices (like auto) to get a discount.
4. Understand your escrow analysis. Call our mortgage customer service team at 931.431.6800, ext. 2266. We are here to help and can provide strategies on how to prepare for a possible increase and minimize its impact on you.

By actively managing these aspects, you can help minimize the likelihood of significant increases in your mortgage escrow payments.