Do Mortgage Payments Increase?
While this sounds like a no-brainer question, it’s actually a little more complicated than it appears.
You see, there a number of different reasons why a mortgage payment can increase, aside from the obvious interest rate change. But let’s start with the obvious and go from there.
And yes, even if you have a fixed-rate mortgage your monthly payment can increase.
While that might sound like bad news, it’s good to know what’s coming so you can prepare accordingly.
There are several reasons why your monthly mortgage payment may have changed. Some examples include:
You have an adjustable rate mortgage (ARM) and the interest rate changed. Check the type of mortgage you have. Some homeowners believe that they have a fixed-rate mortgage loan when their loan actually includes an adjustable rate or some other feature that can cause their interest rate and payment to change.
You have an interest-only or pay-option loan and you are starting to pay the principal. With these loans, you can postpone making principal payments for a while. 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.
You have an escrow account to pay for property taxes or homeowners insurance premiums, and your property taxes or homeowners insurance premiums went up. Check your monthly mortgage statement. If your monthly mortgage payment includes the amount you have to pay into your escrow account, then your payment will also go up if your taxes or premiums go up.
You have a decrease in your interest rate or your escrow payments. It could also be because you stopped paying for private mortgage insurance. If you have private mortgage insurance, your payments may change once you are able to and do cancel the insurance.
You were charged new fees. Your servicer may have charged you fees that increased your monthly payment. Check your monthly mortgage statement or any correspondence you recently received from your lender or servicer.
It’s also possible that your mortgage servicer simply made a mistake. If you think your servicer made a mistake, first call your servicer to check. While on the phone, explain the situation to the servicer. Ask for a corrected statement. Also, ask for a reference number and the name of the person you are talking to, and take detailed notes on what you talked about and the date of the call, so you can keep track for your records. If your servicer doesn’t fix the problem over the phone, send a notice of the error to your servicer explaining why you think it made a mistake in calculating your loan payment. Make sure you send the notice to the address your servicer uses for errors and information requests. This address should be listed on your statement or the servicer’s website – it might be different from the address where you send your payments.
If you still don’t understand why your payment changed, you should call your mortgage servicer, and you may also want to send an information request.