## Why Mortgage Payment Went Up
Your mortgage payment is likely your largest monthly expense. So, when it goes up, it can be a big blow to your budget. There are a few reasons why your mortgage payment might have increased.
**1. Interest rate increase**
The most common reason for a mortgage payment increase is an interest rate increase. When interest rates go up, the amount of interest you pay on your loan each month increases. This, in turn, increases your monthly payment.
**2. Property tax increase**
Property taxes are another common reason for a mortgage payment increase. Property taxes are assessed by your local government and are based on the value of your home. If the value of your home increases, your property taxes will likely go up as well. This will increase your monthly mortgage payment.
**3. Homeowners insurance premium increase**
Homeowners insurance premiums can also increase over time. This is due to a number of factors, including the cost of repairs and the frequency of claims in your area. If your homeowners insurance premium increases, your monthly mortgage payment will also go up.
**4. PMI increase**
PMI (Private Mortgage Insurance) is a type of insurance that is required by lenders for borrowers who make a down payment of less than 20% on their home. PMI is designed to protect the lender in the event that the borrower defaults on their loan. PMI premiums can increase over time, which will increase your monthly mortgage payment.
**5. Escrow shortage**
An escrow shortage occurs when the amount of money in your escrow account is not enough to cover your property taxes and homeowners insurance premiums. When this happens, your lender will require you to make up the difference. This will increase your monthly mortgage payment.
**How to avoid a mortgage payment increase**
There are a few things you can do to avoid a mortgage payment increase.
* **Shop around for a lower interest rate.** If you have good credit, you may be able to qualify for a lower interest rate on your mortgage. This will reduce your monthly payment.
* **Pay extra towards your principal each month.** Paying extra towards your principal will help you pay off your loan faster. This will reduce the amount of interest you pay over the life of the loan, which will save you money in the long run.
* **Increase your escrow payments.** Increasing your escrow payments will help you build up a cushion in your escrow account. This will help you avoid an escrow shortage, which can lead to a mortgage payment increase.
* **Refinance your mortgage.** Refinancing your mortgage can help you lower your interest rate and reduce your monthly payment. However, refinancing can also come with closing costs, so it’s important to weigh the pros and cons before refinancing.
**What to do if your mortgage payment has already increased**
If your mortgage payment has already increased, there are a few things you can do to cope.
* **Cut back on your expenses.** Take a close look at your budget and see where you can cut back. This may mean reducing your spending on non-essential items, such as entertainment or eating out.
* **Increase your income.** If possible, try to increase your income by getting a second job or starting a side hustle. This will help you offset the cost of your mortgage payment increase.
* **Talk to your lender.** If you’re struggling to make your mortgage payments, talk to your lender. They may be able to help you modify your loan terms, such as lowering your interest rate or extending the term of your loan.
**Conclusion**
A mortgage payment increase can be a big financial burden. However, there are a few things you can do to avoid an increase or cope with one if it does happen. By following the tips above, you can minimize the impact of a mortgage payment increase on your budget.