If I am locked into a rate, how can my mortgage payment go up?

Question

I just got a new payment book and my payment went up $300.00 more. Is because the taxes or insurance went up?

It is an older house. I live in Ma so no hurricane zones.

yes $300 more a month

Answer 1

Several things can cause your monthly payment to increase. ALL increases should be in writing and define the reason for the increases:
rate adjustment (on an adjustable rate mortgage)
escrow increase (because taxes and insurances went up)

IF you escrow your taxes and insurance in your monthly payment - mortgage companies only review the escrow account ONCE per year. If the tax bill or insurance bill was LARGER than they calculated, then you were short at the time the bill became due. The lender PAID the larger amount and is getting that balance back PLUS increased the new monthly amopunt ti cover the increased price.

You may have the option of giving the mortgage a ONE time payment to cover the escrow short fall and then your new monthly payment will included the increased premium charges. Rest assured, mortgage companies DO NOT make money on an escrow account - they take the annual cost and divide by 12. End of story.

Generally, if you get a monthly statement from your lender it will show your rate, and how your payment was applied. Look at the P&I amount - this should be the same combined total (principle + interest) then look at how your escrows were applied. If the escrows INCREASED then you have the answer. If you can afford it, pay the difference from one year to the next to lower your payments and actually see your annual costs.
If the increase is due to a rate adjustment, be sure you know the CAPS for your program. You can find this on the 'mortgage' note itself or the ARM rider that is part of your mortgage note - depending on the state where the mortgage was obtained.

Hope this helps,

Answer 2

Ask your mortgage holder , we don't have the info .

And FYI , 'locked rate ' is a pre-closing term for persons who apply during a certain time frame .

Unless your loan was a 'fixed' rate , that could have been a lock on the initial rate for an ARM .

You might have kicked into a higher rate after the initial (teaser) period because $300 is a bit much for taxes or insurance unless you live in a hurricane zone .

>

Answer 3

I would call the lendor and ask. Are you talking about an increase of $300 per month? That's $2400 per year. That's a very large increase for taxes or insurance. I'm thinking that you were told it was fixed rate but the lendor thinks it was adjustable?

Answer 4

That's the reason..I have a VA loan which is a 30 year fixed rate and the taxes and insurances went up..I have had happen to me several times..I can't do anything about it

Answer 5

Several reasons, increase in property tax, increase in home owners insurance. Read the fine print on your contract, there are very creative mortgages out there with hidden costs also.

Answer 6

This happened to me. The state reassessed the property and there isn't much you can do about that. If it is your primary residence you could apply for a reassessment exemption, but this may only save you about $75-$100 a year.

Answer 7

Most likely. If it is a new house, the estimated taxes were on the unimproved property and you probably ended up with quite a shortfall at the end of the year. Now they have to make that up.

Answer 8

yes, it is probably due to an increase in taxes or insurance. Call you mortgage company and they should be able to provide this information to you.

Answer 9

Was it a newly built house when you purchased it? You may have been paying taxes on the LAND ONLY for the first year. You could have been lied to about it being a fixed loan.

Call the lender.