October 28, 2020
Some borrowers discover their monthly mortgage payment has gone up and wonder why. Regardless of whether your home loan is an FHA mortgage, a VA home loan, or a conventional mortgage, there are reasons why you might have experienced an increase in your monthly mortgage payment amount.
If you see changes in your mortgage payment that you don’t recognize or understand, the first thing you should do is to reach out to your loan servicer to get more information.
Don’t simply accept the change if you don’t understand why it happened; consumer advocacy groups such as the government’s Consumer Financial Protection Bureau remind home owners that sometimes a change in your mortgage payment could be a simple mistake by the lender and one that could be immediately addressed with a simple phone call.
If There Was A Mistake On Your Loan
In cases where you feel there is an error in your mortgage payment calculation, the Consumer Financial Protection Bureau (CFPB) advises borrowers not only to contact the lender, but to be very particular about documenting the process. “…ask for a reference number and the name of the person you are talking to, and take detailed notes on what you talked about and the date of the call, so you can keep track for your records.”
That’s advice from the CFPB official site, which adds, “If your servicer doesn’t fix the problem over the phone, send a notice of error to your servicer explaining why you think it made a mistake in calculating your loan payment. “
Not All Payment Adjustments Are Errors
But there are other reasons, too. For example, some borrowers have adjustable rate mortgages and when the interest rate adjustment period happens for the first time, your payments may change.
Borrowers who don’t like the amount they are paying under the adjusted interest rate do have the option to refinance the mortgage; if you have an existing FHA mortgage you can use the FHA Streamline Refinance option which has no FHA-required appraisal or credit check and must usually result in a benefit to the borrower such as a lower payment and/or a lower interest rate.
Another reason your mortgage payment might increase? Property taxes. If your property taxes go up and you are using an escrow account to pay them, that could result in a higher mortgage payment. The same is true in cases where you are using escrow to pay for homeowner’s insurance.
Some payments may actually go down in situations where homeowner’s insurance is canceled, where an adjustable-rate mortgage is adjusted downward instead of upward (as rare as that may or may not be), etc.
Some borrowers may experience a higher payment requirement if the lender has charged them fees–check with your lender to see if you have any outstanding fees or pending fees due and how they may affect your payments.