Why Does My Monthly Mortgage Payment Change?

Many people expect their monthly mortgage payment to remain the same throughout the life of a loan; however, there are several reasons why monthly mortgage payments can fluctuate. Adjustable rates and taxes are the two biggest factors affecting mortgage payments.

The Type Of Loan Matters

When a loan involves a fixed interest rate, the mortgage payment will likely remain the same throughout the life of a loan. It is possible to have your payment increase, however, if you have taxes and insurance costs included in your payment.  Both, taxes and insurance costs can go up, therefore making your payment higher.

Adjustable rate mortgages are established for changes.  They have established rate change dates, that fluctuate with market conditions. Your payment can increase or decrease. In some cases, homeowners will see their mortgage payments actually decrease.

Additional Factors

There are a few additional factors that will cause monthly mortgage payments to rise.

  • Advanced or extra payments – When homeowners prepay mortgage obligations, or overpay, on a regular basis, a monthly statement may reflect a lower amount due. If the prepayment was applied to the principal of a loan, continuing a normal payment schedule can reduce the life of the loan.
  • Skipped or late payments – A mortgage payment may go up temporarily, to reflect late payment fees. This “extra” charge should be clearly spelled out in the statement.
  • Forced insurance - If you have not paid your annual fire insurance, your lender may apply "forced insurance." The insurance rates of these types of policies may be higher than typical policies and will generally increase your monthly payments.