Why did my mortgage payment go up on a fixed-rate loan?

A fixed-rate mortgage fixes the interest rate, which fixes the principal and interest portion of your payment for the entire term. It does not fix property taxes or homeowners insurance, both of which the servicer collects through your escrow account and pays on your behalf. When your county reassesses and taxes rise, or your insurer raises premiums, the escrow portion increases and so does your total payment. Insurance premiums in particular have risen sharply in many markets, which is a common source of unexpected increases.

The increase is usually larger than the underlying cost change, which is what confuses people. When actual costs exceed what was collected, the account develops a shortage, and the servicer must both collect the higher ongoing amount going forward and make up the past shortfall, typically spread over twelve months or billed as a lump sum you can choose to pay. That double effect is why a modest tax increase can produce a payment jump that looks disproportionate. The following year, once the shortage is cleared, the payment usually drops back somewhat.

What to do with the annual escrow analysis statement your servicer is required to send. Verify the tax amount against your actual tax bill and the insurance amount against your policy, since servicer errors happen and paying the wrong parcel or a lapsed policy premium does occur. Confirm any exemptions you qualify for are reflected in the tax figure, particularly a homestead exemption that may not have been applied after purchase. If the insurance line is the driver, shop your homeowners policy, since rates vary substantially between carriers and switching flows straight through to your payment. And if your taxes rose because of a reassessment you think is wrong, appealing the assessment addresses the cause rather than the symptom.