FAQs

I have an Adjustable Rate Mortgage. Why did my payment increase?

If your monthly mortgage payment recently increased, there are generally two main reasons why this happens with an Adjustable-Rate Mortgage (ARM).

1. Interest Rate Adjustments

By design, an ARM features an initial fixed-rate period (often 5, 7, or 10 years) followed by an adjustable period. If your initial fixed period has ended, your interest rate—and therefore your principal and interest payment—will now periodically adjust up or down based on current market index rates.

2. Escrow Account Changes (Taxes and Insurance)

Even if your interest rate has not adjusted, your total monthly payment can still go up if you have an escrow account. If your local property taxes or homeowner’s insurance premiums increased over the past year, your monthly escrow collection must increase to cover those higher bills. (Want to dig deeper? Learn more about how escrow accounts work.)

How you will be notified of changes:

We will never surprise you with an interest rate change! You will always receive an official Notice of Adjustment letter well before your new payment amount goes into effect, giving you time to review your new rate and prepare your budget.

To explore exactly how your rate caps and adjustment periods are calculated, please read our complete guide to Understanding Adjustable-Rate Mortgages.