Your Mortgage Payment WILL Increase Even If You Have a Fixed Rate

One of the most common misconceptions homeowners have is thinking that because they have a fixed-rate mortgage, their payment will never change. That’s not true.

While your interest rate may be fixed, your monthly mortgage payment will go up over time. And when it increases, it often catches people completely off guard.

Here’s why it happens and how you can plan for it.

What Makes Up Your Mortgage Payment?

Most monthly mortgage payments are made up of four main components:

• Principal – the portion that pays down your loan balance
• Interest – the cost of borrowing the money
• Property Taxes – assessed by your local municipality
• Homeowner’s Insurance – your annual insurance premium

These are often grouped together and referred to as PITI.

The “Fixed” Part vs. The Variable Parts

When you hear “fixed-rate mortgage,” that term only applies to principal and interest. Those two portions stay consistent over the life of your loan.

However, property taxes and insurance are not fixed.

• Property taxes can increase as your home’s assessed value changes or local tax rates rise.
• Insurance premiums often increase due to inflation, claims in your area, or rising rebuild costs.

Because taxes and insurance are usually paid through an escrow account, any increase shows up as a higher monthly payment.

Why This Can Feel Like a Surprise

Many homeowners don’t realize their taxes or insurance have gone up until their lender sends an escrow analysis and adjusts their payment. That change can feel sudden, even though nothing about the loan itself has changed.

This is especially common for:

• First-time homeowners
• Buyers coming off their first year of ownership
• Homeowners in areas with rising property values

What You Can Do

While you can’t always prevent increases, you can plan for them.

• Review your escrow analysis each year
• Budget with some flexibility for future increases
• Shop insurance rates periodically
• Ask your lender questions if a change doesn’t make sense

Understanding how your mortgage payment actually works can help you avoid stress and stay financially prepared.

If you ever have questions about your payment or how these changes might impact a future purchase, we’re always happy to help!