How rising tax, insurance and association dues raise a fixed-rate payment

A fixed rate holds the principal-and-interest line. It does not hold the printed payment once escrow and association dues sit inside that payment. Track 5 lesson 12 is a rate that is stable while capacity still moves. This lesson is that split on a housing total: r locked, the sum not locked, because three of the legs are not r.

Cairn Street Lending's PI is fixed at $1,684.22. Year 0: tax $348.33, insurance $137.00, association dues $185.00, printed total $1,684.22 + $348.33 + $137.00 + $185.00 = $2,354.55. Year 1: tax $392.10, insurance $186.50, association $214.00, printed total $1,684.22 + $392.10 + $186.50 + $214.00 = $2,476.82. The PI line did not move. The payment rose $2,476.82 − $2,354.55 = $122.27.

Association dues, a periodic charge from a homeowners' association, are a third non-loan leg. They may sit inside the payment the way tax and insurance do, or they may sit beside it as a separate cash date. On this book they sit inside. They rose $214.00 − $185.00 = $29.00. Tax rose $43.77. Insurance rose $49.50. None of those three figures came from the installment formula.

Lesson 4's fixed loan held $1,397.65 because that figure was PI. This lesson's $1,684.22 is also held. The $2,354.55 was never a fixed-rate object. It was a sum of a locked line and three unlocked lines. Calling the total a 'fixed payment' names the rate and then adds three calendars the rate does not govern.

Fixed is a property of r, and so of PI. It is not a property of a total that contains tax, insurance and dues.