Why Did My Mortgage Payment Go Up?

Unexpected bills are no fun, but your mortgage doesn't fall into that category. It arrives, right on time, and you pay it, just like that. Until it surprises you. Here's why your mortgage payment went up.

You’ve gotten used to paying the same amount of your mortgage every month. But out of the blue, your payment went up. Before you panic, take a closer look at these three things.

Did an ARM make your payment go up?

First things first. Do you have an adjustable-rate mortgage (ARM)? If you do, your interest rate might have just adjusted. ARMs typically have a low, introductory rate and then the rate adjusts periodically.

The good news: If you do have an ARM, your interest rate can adjust down. So you might actually have a lower mortgage payment if the interest rates are going down. Fingers crossed!

Don't let it happen again: If interest rates are favorable, look into refinancing to a fixed rate mortgage.

Did your insurance company raise your homeowner's insurance rates?

Your private mortgage insurance (PMI) typically doesn’t change, but your homeowner's insurance can. Your insurance payments can go up annually based on anything from an increase in crime in your neighborhood to a claim you’ve made. And don’t forget that your insurance will probably go up any time you make a significant home improvement. That payment is typically wrapped up in your mortgage payment, so it might be the reason you see an increase.

The good news? You can always shop around for better rates on homeowners insurance--or you can try to negotiate with the provider you already have.

Don't let it happen again: You can't stop your rates from going up, but you can be prepared. If you're adding on to your home, or adding a pool or anything else, ask before you improve to find out what the higher rates will look like.

Did your property taxes go up?

Congratulations! Your house might be worth more than you thought! Each year you have to pay property taxes on your home. So even if the property tax rate stays the same, your payment might go up if your home’s value increases.

The good news? If your home is more valuable than when you bought it you can make a bigger profit if you decide to sell. Or you can take out a bigger home equity line of credit (HELOC) to make improvements or pay for things like child care and education.

Don't let it happen again: Like insurance, you can't really do anything about this one. You can, however, make sure the assessment of your property is correct.

Read more → Property Taxes Are No Tea Party: 5 Questions to Ask Before Appealing Your Bill

An unexpected jump in your mortgage payment can be an unpleasant surprise, but knowledge is power. Learn more about what's in your mortgage payment, so you'll be ready.

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