Things That Can Make Your Mortgage Payments Increase

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Filed under: Borrower Tips

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When you sign your name on to a 30-year fixed mortgage, you inherently assume that your payments will remain the same for…  the next 30 years.  Right?

In theory, that is true.  However, in reality it isn’t always the case.

The reason is because there is more involved with your mortgage payment than simply repaying the money you borrowed from a lender and those other items can be fluid and change without much notice.

The good news is that these items can possibly even make your payment go down.

Property Taxes

If your monthly payment has impounds for your property taxes, then the payment will be adjusted if/when your property tax bill changes.  Sometimes it takes a few months for the loan servicer (the company that collects your mortgage payment) to catch up with tax changes but sooner or later, if your property taxes are adjusted, your monthly house payment will adjust accordingly.

Property Insurance

Insurance premiums can change annually or possibly even more often.  If they are included in your monthly mortgage payment, then these changes will also affect your payments.  Keep in mind that when you do things like increase your coverage or change your deductibles, the annual premium will likely change and this will eventually be reflected in the mortgage payment.

Escrow Reserves

Lenders must keep a cushion in your account so that the needed money for taxes and insurance will be there when those items need to be paid.  This is referred to as “escrow reserves”.  If your escrow reserves get too low, you may get a letter from the mortgage company telling you that you either need to send them a lump sum to increase your reserves or they may need to increase your payments to make up for the deficiency.  Sometimes, however, there can also be an excess in your reserve account, prompting the mortgage company to send you a check.  Those are good days!

If you see any changes in your monthly payments, it’s always good to contact your lender and ask a few questions.  Make sure there aren’t any errors and that you are paying the proper amount every month.

If I can be of any assistance or answer any mortgage related questions for you, please feel free to contact me.

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