Why your mortgage payment changed when the loan didn't

A mortgage payment can rise even when the loan, the rate and the balance stay the same. On a loan with escrow, look at the escrow account first. Escrow is an account your lender sets up to pay certain property expenses for you, and it's sometimes called an impound account.

What escrow pays

Many lenders require you to pay your property taxes and homeowners insurance through escrow. Those amounts are part of the regular mortgage payment, and the servicer pays the tax and insurance bills from the account on your behalf.

Why the payment moves

Property taxes and insurance premiums can change from year to year, and the escrow payment and total monthly payment change with them. The monthly escrow amount is based on the taxes and insurance the servicer expects to pay over the coming year. A new tax assessment or a higher insurance renewal shows up on your mortgage bill this way.

Where the numbers come from

The tax line comes from your local tax bill, which starts with the assessment. How to read your property tax assessment goes through that notice line by line. The insurance line is your homeowners premium at renewal, and Why your home insurance premium went up covers what moves it.

Catastrophes, construction costs, inflation and the cost to replace your home are among the reasons insurance premiums rise.

Where to see it

The annual escrow account statement shows the account's history and a projection of activity for the next year. It explains the new payment. Keep each year's statement with the mortgage papers, so you can compare the next one against it.

An annotated example

What to do next

Set the statement beside last year's and read the tax line and the insurance line. If one rose, the property tax assessment or the insurance renewal is where to look next. Call your servicer about any line on the statement you can't match.