Why Did My Mortgage Payment Just Spike—and What Should I Do About It?
Surprised by a Higher Mortgage Payment? You’re Not Alone
If your mortgage payment suddenly increased, it can be a stressful and confusing experience—especially if you thought you had a fixed monthly amount. But don’t panic. There are a few common reasons this can happen, and knowing what to look for will help you take the right steps.
Most Common Reason: Escrow Shortage
The most frequent reason a mortgage payment increases is due to an escrow shortage. Your mortgage lender collects money each month to cover property taxes and homeowners insurance, then pays those bills on your behalf when they’re due.
If your property taxes or insurance premiums went up and your lender didn’t collect enough to cover it, they’ll increase your monthly payment to make up the difference. You may also see a one-time escrow shortage balance you can pay up front or spread out over 12 months.
According to a recent report from CoreLogic, property tax increases across the U.S. averaged 4 percent in 2024—and many counties are reassessing home values again in 2025, driving costs even higher.
https://www.corelogic.com/intelligence/u-s-property-tax-rates-and-changes/
Did Your Homeowners Insurance Go Up?
Insurance premiums are rising across the country, especially in areas prone to storms, wildfires, or other natural disasters. If your insurance company raised your premium—and your lender is collecting through escrow—your payment will go up, too.
You can check your most recent mortgage statement or escrow analysis to see if insurance costs are the culprit.
If You Have an Adjustable-Rate Mortgage
If you have an adjustable-rate mortgage (ARM), your interest rate may have reset. ARMs usually start with a fixed rate for a few years and then adjust annually based on market conditions. If rates have increased recently—and they have—you could see a jump in your monthly payment.
The Federal Reserve has raised rates multiple times since 2022 to fight inflation, which has led to higher mortgage rates across the board.
https://www.federalreserve.gov/monetarypolicy.htm
Other Less Common Reasons
Some less common causes include:
Your escrow cushion was too low, and your lender is adjusting it.
You had late payments, and penalties were added.
There was an error in your escrow or billing.
Always call your lender or servicer and ask for a detailed escrow analysis and breakdown of your new payment.
What Can You Do About It?
First, don’t ignore the increase—review your escrow statement carefully.
Then, take these steps:
Contact your lender: Ask for a full explanation and confirm the cause of the change.
Shop your homeowners insurance: You may be able to find a lower premium elsewhere.
Dispute errors: If your escrow or tax bill looks wrong, ask your servicer to investigate.
Plan ahead: Set aside a little extra in savings to prepare for future escrow changes.
If the increase is related to your interest rate or overall financial goals, it may be time to talk to a mortgage professional about refinancing or adjusting your strategy.
