There are a number of reasons that a mortgage payment can go up. If you are delinquent on payments, late fees are added to scheduled monthly payments. Your original mortgage may not have been a fixed rate mortgage. The most likely culprit, however, is a change in your escrow account.
What is an escrow account? Basically, when you purchase a home you are able to have the lender receive a little more money then necessary to pay the mortgage and pool these funds for you to pay other bills associated with the property. This money builds over the months and is then distributed to pay real estate taxes, insurance or mortgage insurance when they come due. Lenders like these arrangements because they feel more secure in knowing the property taxes are paid and the property is insured. Some lenders actually require this type of account. If they do, certain regulations keep the lender in check with regard to how much they can legally hold.
When your mortgage payment increases due to an escrow account change, technically the mortgage amount has not actually increased. Instead, the costs of your insurance or taxes has increased. Because of this, the amount the lender is allowed to hold in escrow is modified, almost always upward. The result is your overall mortgage payment goes up. If you have an issue where your mortgage payment has increased, the rules associated with mortgages are complex. Do not hesitate to contact the legal experts at Mooney and Associates to make sure your rights are properly protected. You can reach us at 1-877-32-4656 or 717-200-HELP!
If you are preparing to buy a home, we can help ensure your purchase goes smoothly and that your new deed and title are good. Let Mooney & Associates handle your Real Estate closing and you have peace of mind that you have legal experience and advice behind your biggest purchase!