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Mortgage payments are an influential factor when it comes to family budgeting and spending, and it’s not unusual for them to change over time. If you’re wondering, “why did my mortgage payment go up (or down)?” here’s a look at three of the most common reasons.
1. Your property taxes increase or decrease
Property taxes are a top reason that mortgage payments can change, particularly if your mortgage has an escrow account. Escrow refers to money that your mortgage servicer sets aside to pay property taxes and insurance premiums. You pay a portion of the total amount each month as part of your mortgage payment. As a result, as these costs go up and down, so can your mortgage payment.
You can plan ahead for changes as your taxing authority conducts property tax assessments periodically and your mortgage company runs an escrow analysis. If you’re a Mr. Cooper customer, we run an escrow analysis at least once a year to estimate how much you’ll need in your escrow account to cover your expenses. From there, we explain the results in an Escrow Review Statement, which can be helpful for budgeting.
That said, according to a recent study, the cost of maintaining and owning a home has gone up 26% since 2020.1 The study factored in everything from taxes to utilities. So, if your mortgage payment has gone up, you’re not alone.
Note: If you have a non-escrowed account, please visit our Help Center for more information on payment changes.
2. Your homeowners insurance changes
Let’s talk about homeowners insurance. Most mortgage lenders require homeowners insurance and that’s a good thing. These policies usually cover a home and its contents from damage and theft, which can be critical after natural disasters and other unexpected events.
As a course of business, insurance premiums can be adjusted on an annual basis. And if your costs are paid through your escrow account, your mortgage payment will be impacted.
3. You have an Adjustable Rate Mortgage (ARM)
A third factor that can be at play is an adjustable rate mortgage (ARM). These are loans that have interest rates that change over time, by design. As a result, your monthly payment — which includes your mortgage’s principal and interest amounts — can, too.
That said, the benefit of an ARM loan is that the initial interest rate is typically lower than that of a fixed rate loan. But you’ll want to keep in mind that your monthly mortgage payment will fluctuate according to the terms of your loan.
Have more questions about your payment?
If you’re a Mr. Cooper customer and would like more information about your loan, reach out to us anytime in one of the following ways:
- Access our chat feature in the Help Center for answers 24/7 from our virtual assistant.
- Connect with a Live Chat agent using the same chat feature during business hours.
- Sign in to your online account to send a message through our secure Message Center.
For the best experience, we recommend being signed in before chatting with us. This will ensure that we have all the information needed to better assist you. (You can create an online account here if you don’t have one yet.)
Whenever you need it, we’ll be here to help.
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1 https://www.bankrate.com/mortgages/hidden-costs-of-homeownership-study/
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