Why did my mortgage payment go up after a year?

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If you’ve noticed that your mortgage payment has increased after a year, you may be wondering why this has happened. Understanding the factors that can cause your mortgage payment to go up is important for homeowners. In this article, we will explore some of the common reasons why mortgage payments can increase after the first year.

Adjustable Interest Rates

Adjustable interest rates: One of the main reasons why your mortgage payment may have increased is due to an adjustable interest rate. Many mortgages have an initial fixed-rate period, typically one to five years, after which the interest rate can adjust annually. If your mortgage has an adjustable interest rate, any changes in the market rates can impact your monthly payment. If interest rates have risen since you first obtained your mortgage, your payment may increase to reflect the new rate.

Escrow Account Adjustments

Escrow account adjustments: Another factor that can cause your mortgage payment to go up is adjustments to your escrow account. An escrow account is used to collect funds for property taxes, homeowners insurance, and other related expenses. Each year, your lender will review these expenses and adjust your monthly payment accordingly. If there has been an increase in property taxes or insurance premiums, your mortgage payment may increase to cover these additional costs.

Changes in Insurance Premiums

Changes in insurance premiums: Insurance premiums can also impact your mortgage payment. If you have a mortgage insurance policy, which is typically required for loans with a down payment of less than 20%, any changes in the insurance premium can affect your monthly payment. Insurance premiums can increase due to factors such as changes in the property’s value, increased risk factors, or changes in the insurance provider’s rates.

Loan Modification

Loan modification: In some cases, your mortgage payment may increase due to a loan modification. A loan modification is a change made to the terms of your loan, often done to help borrowers who are struggling to make their payments. While a loan modification can provide temporary relief by reducing the monthly payment, it may also result in a higher payment in the long run. This can happen if the modification extends the loan term or adds unpaid interest to the principal balance.


In conclusion, there are several reasons why your mortgage payment may increase after the first year. These include adjustable interest rates, adjustments to your escrow account, changes in insurance premiums, and loan modifications. It is important to review your mortgage agreement and communicate with your lender to understand the specific factors contributing to the increase in your monthly payment.


– Bankrate.com
– Investopedia.com
– Consumerfinance.gov