Why does my monthly mortgage payment go up?

There are many reasons why your mortgage payments might go up every month. Some of the reasons could happen naturally over time, depending on your loan. Knowing why mortgage payments increase can help you plan and, maybe even, avoid them in the future.

But just because your monthly payments go up, doesn’t mean they can’t come down. Many borrowers choose to refinance their mortgage in hopes it will drop their monthly payments.

To start your mortgage refinance and potentially lower your monthly payments, you can fill out an application online today.

Some of the most common causes of mortgage payments increasing are:

Adjustable-rate mortgage: If you have an adjustable-rate mortgage, your monthly mortgage payments can change alongside mortgage rates. This means that there will be some months when you could be paying more than others. Keeping an eye on where rates are can give you an idea of if you will be paying more or less next month.

Homeowners insurance: Depending on your mortgage, your insurance could be bundled in one payment. If your homeowners insurance rises, your monthly mortgage payments will go up as well.

Property taxes: If your home’s value has increased, you could notice your property taxes increasing as well. The amount of property tax you pay is based on your home’s value. Updates you make on your home could increase your property taxes. These taxes are used to fund things like garbage collection, emergency services and public schools.

Property reassessments: Property reassessments are typically done annually, though homeowners can request them. These reassessments are to get an idea of the market values in the area. If reassessments determine that your home’s value has increased, your property taxes and monthly payments will increase as well.

Escrow accounts are used to hold funds and payments by a third party during a transaction.

In the context of mortgages, escrow accounts are used for managing property taxes and homeowners insurance payments. If you set up an escrow account for these payments, each month, when you make your monthly payments, your mortgage lender will take a portion of your payment and set it aside. They will hold that portion in an escrow account till your property tax and homeowners insurance payments are due.

Every year, your lender will review your escrow account to see if there is a remaining balance or leftover funds. If there is a remaining balance you can pay the money as a one-time payment or increase your monthly payments. If there are leftover funds, you will get an escrow refund.

You can also use an escrow account when closing on your home. You will put the funds to buy a home in an escrow account to show sellers that you are serious about purchasing their home.

You can lower your monthly mortgage payments several ways, the most popular way is through a refinance. If mortgage rates have fallen or you are looking to increase the length of your mortgage, you should consider refinancing your mortgage.

Mortgage rates dropping could lower the amount of interest you pay over the life of the loan. Increasing the length of your loan tends to lower your monthly payments by spreading them out over a longer period of time, but this options could lead to more being paid in interest.

You could also use a mortgage refinance to change your adjustable-rate mortgage to a fixed-rate mortgage. This could keep your monthly payments stable and prevent them from potentially raising with the mortgage rates.

Other ways you can lower your monthly mortgage is by canceling your mortgage insurance, if you have any. Not everyone has private mortgage insurance, but if you do you can cancel it after gaining 20% equity in your home.

You can apply for a refinance online through a trusted lender.

There are many refinance options for current homeowners. The first thing you will want to do in the mortgage refinance process is choose which refinance option is best for your situation and needs. During your refinance, you will be connected with a professional Loan Officer who can answer your questions and guide you through the process.

Start your refinance application today and see how you could lower your monthly mortgage payments.