Even with a fixed interest rate, you might be surprised to learn that your mortgage payments are subject to change. Although it may be jarring at first glance, this is more common than you may think. For a variety of reasons, including changes to associated factors, your monthly mortgage payment may fluctuate during the term of your loan. Let’s dive into them below.
Owning a home is a dream for many, but it can come with unexpected surprises. One of those surprises can be a sudden jump in your monthly mortgage payment.
This guide will help you understand why your mortgage payment might be increasing and what you can do about it.
Why is my mortgage payment changing?
There are several reasons why your mortgage payment might be changing. Here are the most common ones:
1. Property Tax Changes:
- Your property taxes are reassessed periodically, and if they go up, your mortgage payment will also increase to cover the higher cost.
- You may also lose certain property tax exemptions, which can lead to a higher tax bill and a higher mortgage payment.
2. Homeowners Insurance:
- Your homeowners insurance premiums can also change, and if they go up, your mortgage payment will also increase to cover the higher cost.
- You may also need to add an escrow account to your mortgage if you haven’t already, which will increase your monthly payment.
3 Interest Rate Adjustments:
- If you have an adjustable-rate mortgage (ARM), your interest rate can change periodically, which will also change your monthly payment.
- ARMs typically start with a lower interest rate than fixed-rate mortgages, but the rate can increase significantly after the initial period.
4, Mortgage Refinance:
- If you refinance your mortgage, your monthly payment can change, depending on the new terms of the loan.
- You may be able to lower your monthly payment if you refinance to a lower interest rate or a longer loan term.
- However, if you refinance to a shorter loan term, your monthly payment will likely increase.
5. Service Member Benefits:
- The Servicemembers Civil Relief Act (SCRA) provides certain protections to service members on active duty, including a cap on their mortgage interest rate.
- Once the period of protection expires, their monthly payments may increase.
6. New Fees:
- Your lender may add new servicing fees to your monthly bill, which will increase your mortgage payment.
What can I do about it?
1. Contact your lender:
- The first step is to contact your lender and ask them why your mortgage payment has changed.
- They should be able to provide you with a detailed explanation of the reason for the change.
2. Review your mortgage statement:
- Your mortgage statement should show you exactly how your payment is calculated.
- This can help you identify any areas where you may be able to save money.
3. Shop around for a better deal:
- If you’re not happy with the terms of your current mortgage, you can shop around for a better deal from another lender.
- You may be able to find a lower interest rate or a longer loan term that will lower your monthly payment.
4. Make extra payments:
- If you can afford it, you can make extra payments on your mortgage each month.
- This will help you pay off your loan faster and save money on interest.
5. Refinance your mortgage:
- As mentioned earlier, refinancing your mortgage can be a good way to lower your monthly payment.
- However, it’s important to compare the costs of refinancing to the potential savings before you decide to go ahead with it.
There are several reasons why your mortgage payment might be increasing. By understanding the reasons and taking steps to address them, you can keep your monthly payments under control and avoid any financial surprises.
Additional Resources:
Remember, if you’re ever unsure about anything related to your mortgage, don’t hesitate to contact your lender or a financial advisor.
Can my monthly mortgage payment go up?
Yes, your monthly mortgage payments can go up. For instance, your mortgage payments may increase with each adjustment period (usually yearly) if you have an adjustable-rate mortgage. Even with a fixed-rate mortgage, there are a number of common reasons why your monthly mortgage payments could go up.
Be aware that some of the following are frequently deducted from your monthly escrow account or combined with your mortgage payments.
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Even with a fixed interest rate, you might be surprised to learn that your mortgage payments are subject to change. Although it may be jarring at first glance, this is more common than you may think. For a variety of reasons, including changes to associated factors, your monthly mortgage payment may fluctuate during the term of your loan. Let’s dive into them below.
Why Your Fixed Rate Mortgage Payment May Skyrocket: Escrow Shortages Explained
FAQ
How do I stop my mortgage from increasing?
Why does my mortgage payment keep getting higher?
Why does my mortgage balance keep increasing?
Is it normal for escrow to increase every year?
Why is my mortgage rate so high?
And if you want a stellar bargain on your mortgage rate, shopping around is essential. In fact, you’ll probably want to put your shopping shoes on once you hear this bit of news: failing to shop around — and not researching the rates of different providers — could be a reason your mortgage rate is so high. [ Ready to shop around?
Why does my mortgage keep going up?
As mentioned earlier, if you have an adjustable-rate mortgage (ARM), this could be the reason – or one of multiple reasons – your mortgage keeps going up. All ARMs start with an initial rate on the front of the loan, but unlike with a fixed-rate mortgage, that initial rate will change after a certain number of years.
Why did my mortgage payment increase?
“Inflation caused the escrow to increase, county taxes went up and home insurance went up,” he said when asked why his monthly mortgage payment increased. “The increase in my mortgage payment was primarily attributed to a rise in home insurance rates and an adjustment in the escrow amount allocated for county taxes,” he added.
Why do mortgage payments go up and down?
Although it may be jarring at first glance, this is more common than you may think. Mortgage payments can go up and down throughout the life of your loan for a few reasons, particularly if there are adjustments to factors coupled with your monthly payment. Let’s dive into them below. Can my monthly mortgage payment go up?