Why Did My Mortgage Go Up Or Change? | Chase (2024)

You may be surprised to know that your mortgage payments can fluctuate, even if you have a fixed interest rate. 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?

Yes, your monthly mortgage payments can go up. For example, if you have an adjustable-rate mortgage, your mortgage payments can go up with each adjustment period (typically annually). If you have a fixed-rate mortgage, you may still see an increase in your monthly mortgage payments due to several common factors.

Note that some of the following factors are often coupled with your mortgage payments or taken out of an escrow account on a monthly basis.

1. Property taxes and property reassessment

Your property taxes can increase based on your home’s market value. For example, home renovation projects that expand square footage can increase your property's value and then increase your property taxes. The property taxes you pay can also increase due to a change in tax rates at local or state municipalities.

A property reassessment is done by your local municipality to ensure people are paying property taxes that are accurate and fair. In some cases, homeowners may order a reassessment from their municipality themselves, although these are typically performed annually. The assessor reviews properties in the community and takes a holistic look at the market. This could determine that your home has increased in value, which may result in an increase in your property taxes and therefore your mortgage payments.

2. Homeowners insurance

Taking out a mortgage means you’re typically required to have a homeowners insurance policy. Homeowners insurance payments are typically coupled with your monthly mortgage payment — so if the cost of your insurance policy goes up, then it may seem that your monthly mortgage payment has gone up. Your insurance company might raise rates due to inflation, as well as costly or more frequent claims (like severe weather events). In this scenario, it’s not that your mortgage itself has increased but that associated homeownership costs have gone up.

4. Tax exemptions

Property tax exemptions may reduce your tax rate. Your qualifications for certain exemptions may vary depending on the year. Some years you may not qualify, and as a result, you may notice an increase in your monthly mortgage payments.

Can my monthly mortgage payment go down?

Yes — your monthly mortgage payment can go down based on some of the same factors that may cause them to rise. However, the details are a little different:

1. Property taxes

You could potentially see a decrease in property taxes if you have your home value reassessed and for various reasons — like market conditions or property depreciation — your home value has gone down.

2. Removal of homeowners insurance

If your homeowners insurance is removed, you may notice your monthly mortgage payment go down. You may have found a new premium elsewhere and see that your mortgage payments have gone down due to the price reduction.

3. Tax exemptions

As mentioned, your eligibility for tax exemptions can differ each year. You might find you qualify for a new exemption that makes your monthly payments go down; it would be best to consult a tax expert.

4. Mortgage insurance

Mortgage insurance, or private mortgage insurance (PMI), is often required by lenders to protect their investment if a borrower were to default on their loan. PMI is often required when a down payment is less than 20% but varies by mortgage type and lender. When you pay off a certain percentage of your mortgage, your lender may drop the mortgage insurance premium and your payment may go down. Do note that some mortgages never drop the PMI premium.

In summary

It’s common to see monthly mortgage payments fluctuate throughout the life of your loan due to changes in your home value, taxes or insurance. Noticing changes in your mortgage statements and investigating them can help you understand why your monthly payments went up (or down) and how you anticipate any changes in the future.

Why Did My Mortgage Go Up Or Change? | Chase (2024)

FAQs

Why did my mortgage suddenly increase? ›

If your home value has risen since the prior year, the cost of your taxes and insurance will also increase. Thus, the entity that holds your mortgage will hike up your escrow to ensure your monthly payment can cover those higher bills.

Why did my mortgage balance go up? ›

You could see a rise in your mortgage payment for a few reasons. These include an increase in your property tax, homeowners insurance premium, or both.

What will cause your mortgage amount to increase or decrease? ›

Property taxes going up or down can cause a mortgage payment change. Most people pay their property taxes (and homeowners insurance) through an escrow account. With an escrow account, the cost of your property taxes is spread out in equal payments over a year, so you don't have to pay your entire tax bill in one shot.

Why did my mortgage go up 50%? ›

Every year, after the taxes and insurance are paid, your lender performs an escrow analysis to see if the amount you're putting in each month will be enough to cover the bills next time. If your escrow account comes up short, an increase in your mortgage payment amount might occur to cover the expected shortage.

Why is my mortgage going up if I have a fixed rate? ›

It's common to see monthly mortgage payments fluctuate throughout the life of your loan due to changes in your home value, taxes or insurance.

Why did mortgage rates just go up? ›

High inflation, a strong housing market, and policy changes by the Federal Reserve have all pushed rates higher in 2022 and 2023. However, if the U.S. does indeed enter a recession, mortgage rates could come down.

Can you dispute an escrow increase? ›

If the case is similar to mine, talk to your bank so they can reevaluate the amount you should actually pay per month into escrow. If the increase occurred because the local tax auditor put a higher value on your home than anticipated, you can appeal your assessment with your local tax office or auditor.

Can your mortgage go up because of escrow? ›

Yes. If your bank determines that there will not be sufficient funds in your mortgage escrow account, it may raise your payment by the amount of the shortage. The bank may offer you the choice to repay the amount in one lump sum or spread the payments over a 12-month period.

Why does my loan amount keep increasing? ›

The loan agreement involves repaying the loan principal with interest. Depending on the loan structure, the interest rate tied to your loan can cause the loan balance to increase over time. In many cases, interest can compound over time through a process called interest capitalization.

How do I stop my mortgage from increasing? ›

Options to reduce mortgage payments include:
  1. Refinance to lower your payment.
  2. Recast your mortgage.
  3. Eliminate your mortgage insurance.
  4. Modify your loan.
  5. Lower your taxes.
  6. Shop around for a lower homeowners insurance rate.
  7. Apply for mortgage forbearance.
Apr 10, 2024

Why am I paying more on my mortgage? ›

That means that for a period of time you are only paying off the interest that's accumulating on the amount you borrowed to pay for your home. Eventually, you have to start paying principal, or the actual amount you owe on the home, and that will make the monthly payments go up.

How can I lower my mortgage payment without refinancing? ›

How to lower your mortgage payment without refinancing
  1. Recast your mortgage. ...
  2. Cancel your mortgage insurance. ...
  3. Lower your homeowners insurance or property taxes. ...
  4. Consider a bi-weekly mortgage payment plan. ...
  5. Ask your lender for a loan modification. ...
  6. Pay off your loan.
Oct 6, 2023

Why did my mortgage go up $900? ›

Why did my mortgage payment increase? Mortgage payments can fluctuate because of changes in the economy like interest rates rising, but can also change for other reasons, such as if your property tax or homeowners insurance premiums increase.

Why did my mortgage go up $1,000 dollars? ›

Mortgage servicers conduct an escrow analysis annually to ensure that enough funds are collected to cover property taxes and homeowners insurance. If the new tax assessment is higher than initially estimated, the mortgage payment will increase to compensate for the shortfall in the escrow account.

Can I lower my mortgage payment by paying down principal? ›

Because interest is calculated against the principal balance, paying down the principal in less time on your mortgage reduces the interest you'll pay.

Why did my mortgage go up by $100? ›

Why did my mortgage payment increase? Mortgage payments can fluctuate because of changes in the economy like interest rates rising, but can also change for other reasons, such as if your property tax or homeowners insurance premiums increase.

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