Why Did My Mortgage Payment Go Up? It’s Not Your Mortgage!

I had a client reach out to me recently, concerned about their mortgage payment going up. They were under the impression that with their 30-year fixed mortgage, the payment would remain the same, so they couldn’t understand why they were seeing an increase. I get this question a lot, so I thought it would be helpful to explain why your mortgage payment might change, even if you're in a fixed-rate loan.

First off, let me be clear: if you're in a fixed-rate mortgage, your *actual mortgage* payment isn't going up. That part is locked in. What can change, though, are two key components that are often wrapped into your monthly payment: your homeowner's insurance and your property taxes.

Let’s start with insurance. If you have your homeowner’s insurance included in your mortgage (which many people do), you’re going to receive a new insurance bill every single year. Whether or not you're paying it through your mortgage, it’s really important to look at that bill and compare it to last year’s. If it’s gone up, that’s likely why your mortgage payment has increased. When your insurance goes up, your lender adjusts your escrow account to cover the new, higher premium, which can lead to a higher overall mortgage payment.

This brings me to an important point: when you receive that new insurance bill, it’s the perfect time to shop around and get new quotes. Even if you love your current insurance provider, it doesn’t hurt to call and ask if they have any discounts or adjustments that could help you save. I actually make it part of my process to call my clients about 11 months after we close their loan, just to check in and see if they’ve received a new insurance bill. I like to keep track of whether their premiums are increasing and, if so, help them find alternative quotes if needed. With the current insurance climate, especially in California, this is something I’ve found super helpful for my clients.

Now, while we can control insurance by shopping around, the other factor—property taxes—isn’t quite as flexible. Every year, your property taxes are reassessed based on the value of your home and the local tax rates. If home values in your area have gone up, your property taxes will likely increase. It’s not usually a massive jump, but even a small increase in taxes can make a noticeable difference in your mortgage payment. The good news? If the market slows down, your property taxes could actually decrease, although that doesn’t happen as often.

So, to sum it up: if your mortgage payment has gone up, it’s almost always due to a change in your insurance or property taxes. Your fixed-rate mortgage is still exactly what it was when you signed on the dotted line, but the components outside of that—like insurance and taxes—can fluctuate year to year.

If you ever have questions about changes in your mortgage payment, just give me a call. It’s a quick check, and I’m always happy to help you figure out what’s going on. Whether it’s looking at your insurance options or reviewing your property taxes, I’m here to guide you through it. I hope this helps clear things up!