Why can my mortgage payment go up after closing if my rate is fixed?

Why does my mortgage payment go up with a fixed rate?

Your mortgage payment can increase even with a fixed rate because the payment includes more than just principal and interest. Most mortgage payments include taxes, homeowners insurance, and sometimes private mortgage insurance (PMI) or HOA fees through an escrow account that the lender manages.

Property taxes commonly increase when local governments reassess home values or raise tax rates. Homeowners insurance premiums can go up due to inflation, claims in your area, or changes in coverage. PMI drops off once you reach 20% equity, but insurance and tax changes continue throughout the life of the loan.

Check your annual escrow statement to see exactly what changed and by how much. The statement breaks down each component and shows whether the lender collected too much or too little over the past year. Contact your mortgage servicer if any amounts look wrong or you want clarification on specific increases. They can walk you through the calculations and explain when changes take effect.