Why Did My Mortgage Payment Go Up? (It Probably Didn’t)

You open the letter, the number is higher, and your stomach drops. I get this call every year.

Here’s the reassuring part: for most people, your mortgage payment didn’t go up at all.

To see why, you have to look at what a “mortgage payment” actually is, because the phrase is a bit of a misnomer.

Your mortgage payment is only part of your payment

If you have an escrow account, which some people call an impound account, then in a lot of cases the actual mortgage portion is only somewhere between half and three quarters of what you send in every month.

The rest isn’t mortgage at all. And the rest is the part that moves.

Wondering how this applies to you? Ask my AI: “What is an escrow account?” →

What doesn’t change

If you have a fixed-rate loan, your interest rate isn’t changing. Your principal and interest payment isn’t changing. That part is locked, which is the whole point of a fixed-rate loan and one of the better deals in personal finance.

So when the number on the statement moves, that almost certainly isn’t the piece that moved.

What does change, potentially every year

Two things.

Your homeowners insurance. Premiums can fluctuate a great deal year to year depending on what’s happening in the insurance market, and in California, we’ve all watched that market do some things lately.

Your property taxes. That’s down to your city, county, and state. Depending on where you live, assessments get redone somewhere between every one and four years, and a reassessment can push your taxes up.

Your escrow account collects for both. When either goes up, the escrow portion of your payment goes up with it, and your total monthly payment follows. Your mortgage sat there unchanged the whole time.

The one thing worth doing about it

Here’s a practical move most homeowners never make: shop your homeowners insurance every year.

Not because your current carrier is ripping you off, but because those costs move around enough that a policy that was well priced three years ago may not be now. It’s an afternoon, it’s one of the few parts of your monthly payment you have direct control over, and it’s the lever people forget they’re holding.

Property taxes you mostly can’t shop. Insurance you can.

You need more than a good rate

So, to recap: for most people out there, your mortgage payment is not what’s changing. It’s the escrow portion of your monthly payment that’s fluctuating.

That’s worth knowing, because it changes what you do about it. You don’t need to panic and you probably don’t need to refinance. You need to understand which piece moved and whether anything can be done about that piece.

If you want a personalized review of what’s going on in your own case, reach out. Because you need more than just a good rate. You need a good plan.

Common questions

If you’ve got the letter in front of you, ask about it. It’s Mike’s AI, so it’s awake at 11pm, and it collects nothing.

Ready for a person?

If the increase is big enough to hurt, bring it to someone who can read the whole statement.

• Book a time with my team: bring the letter and we’ll work out exactly which piece moved
• Start an application: if you already know you’re ready to move
• Or call the office on (314) 478-3699

This information is not intended to be an indication of loan qualification, loan approval or a commitment to lend. Other limitations may apply. This is not an offer to enter into an agreement. Not all customers will qualify. Information, rates, and programs are subject to change without prior notice. All products are subject to credit and property approval. Not all products are available in all states or for all dollar amounts. Fairway is not affiliated with any government agencies.

Mike Swaleh, Area Manager, NMLS #739145. Fairway Independent Mortgage Corporation, NMLS Entity ID #2289. Equal Housing Opportunity.