Mortgage Payment Went Up Because of Escrow : How to Manage the Increase




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Mortgage Payment Went Up Because of Escrow

Are you a homeowner who recently noticed that your mortgage payment has increased? Don’t panic! There’s a common reason for this, and it has to do with the escrow account associated with your mortgage. In this article, we’ll explain what an escrow account is, why your payment might have gone up, and what you can do about it.

Understanding Escrow

An escrow account is a separate account held by your mortgage lender to cover property taxes and homeowners insurance. When you make your monthly mortgage payment, a portion of it goes towards the principal and interest of your loan, while another portion is set aside in the escrow account to be used for these expenses.

Property taxes and homeowners insurance are typically paid once or twice a year. By collecting a little bit each month, the lenders make it easier for homeowners to budget for these expenses and ensure they are paid on time.

Reasons for Escrow Payment Increase

Now that we understand what an escrow account is, let’s explore why your mortgage payment might have gone up:

  1. Property Tax Increase: The most common reason for an escrow payment increase is a rise in property taxes. If your local taxing authority has increased the tax rate or the assessed value of your property, it will result in a higher escrow payment to cover these increased expenses. You should receive a notice from your lender or taxing authority about the change.
  2. Homeowners Insurance Premium Increase: Another factor that can cause your escrow payment to rise is an increase in your homeowners insurance premium. Insurance providers might adjust their rates due to changes in costs, coverage, or even location-related risks. Your lender will adjust your escrow payment accordingly to accommodate the higher insurance premium.
  3. Missed an Annual Escrow Analysis: Lenders are required to conduct an annual analysis of your escrow account to determine if the amount being collected is sufficient to cover property taxes and insurance. If your lender failed to conduct this analysis for some reason or if there were errors in their calculations, it could lead to an increase in your escrow payment to make up for the shortfall.

What Can You Do?

If your mortgage payment has increased due to an escrow adjustment, there are a few things you can do:

  • Review the Notice: Carefully read any notices or correspondence from your lender. They should provide an explanation for the increase and details on the new payment amount. If you have questions or concerns, contact your lender directly to seek clarification.
  • Check for Errors: Review the breakdown of your escrow account. Ensure that the property taxes and homeowners insurance figures are accurate. If you find any errors, contact your lender and provide them with the correct information to rectify the situation.
  • Appeal Property Tax Assessment: If you believe the increase in your property taxes is unjustified, you may have the option to appeal the tax assessment. Research the local guidelines and deadlines for filing an appeal, gather supporting evidence, and present your case to the appropriate authorities.
  • Consider Refinancing: If the increase in your mortgage payment is placing a significant strain on your finances, you might consider refinancing your loan. A new loan with a lower interest rate and potentially lower escrow payments could help alleviate the financial burden.

Remember, it’s important to take action promptly to address any concerns about your increased mortgage payment. Ignoring the issue may lead to financial difficulties or even the risk of foreclosure if the payments become unmanageable.

Frequently Asked Questions Of Mortgage Payment Went Up Because Of Escrow : How To Manage The Increase

Why Did My Mortgage Payment Increase?

Your mortgage payment may have increased due to changes in your escrow account, such as increased property taxes or insurance premiums.

How Does Escrow Impact My Mortgage Payment?

Escrow accounts are set up to collect funds for property taxes and insurance premiums. If these costs increase, your mortgage payment can also go up.

Can I Lower My Mortgage Payment If Escrow Increases?

Unfortunately, you cannot directly lower your mortgage payment if escrow increases. However, you may be able to refinance your loan to reduce your overall payment.

What Should I Do If My Mortgage Payment Is Too High?

If your mortgage payment is unaffordable, consider reaching out to your lender to discuss potential options such as loan modification or refinancing.


Experiencing an increase in your mortgage payment due to an escrow adjustment can be unnerving, but understanding the reasons behind it can help you navigate the situation. By familiarizing yourself with your escrow account, reviewing notices from your lender, checking for errors, and exploring possible solutions, you’ll be better equipped to manage the increased payment and ensure your homeownership remains affordable.

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