Why did my monthly mortgage payment go up?

If your payment increased, it's usually because property taxes or homeowners insurance rose, changing your escrow requirement. Your servicer's annual escrow analysis explains the adjustment and any shortage being collected.

How much can extra payments really save me?

Quite a lot, especially early on. Because early payments are mostly interest, extra principal payments in the first years can cut years off your loan and save tens of thousands in interest. An extra-payment calculator shows your exact savings.

When can I stop paying PMI?

You can generally request cancellation once your balance reaches 80% of the home's original value, and it must end automatically at 78%. Paying down principal faster can let you drop PMI years ahead of schedule.

Phase 7 of 8

Servicing & Payments

Manage your loan, protect your home, and pay it off smarter.

After closing, your loan enters the servicing phase — the years you spend making payments and building equity. Your servicer (which may differ from the lender who originated the loan) collects payments, manages your escrow account, and handles questions. This is the longest phase of your mortgage, and small, smart decisions here can save you thousands of dollars over the life of the loan.

Staying organized with payments, understanding your escrow account, and exploring strategies like extra principal payments can shorten your loan term, reduce total interest, and help you reach full ownership sooner.

How escrow accounts work

Most loans include an escrow account that collects a portion of your property taxes and homeowners insurance each month and pays those bills when they come due. Your servicer performs an annual escrow analysis; if taxes or insurance rise, your monthly payment can increase, and a shortage may be spread across the next year. Understanding escrow helps you anticipate payment changes rather than being caught off guard.

The power of extra principal payments

Applying extra money directly to principal is one of the most effective ways to save. Because early payments are mostly interest, even modest additional principal early in the loan can shave years off the term and save tens of thousands in interest. Options include one extra payment a year, a fixed extra amount monthly, or biweekly payments. Always confirm with your servicer that extra funds are applied to principal, not prepaid interest.

Dropping PMI and protecting your home

If you put less than 20% down, you're likely paying private mortgage insurance. Once your loan balance reaches 80% of the original value, you can typically request PMI cancellation, and it must automatically terminate at 78%. Tracking your equity can end this cost years early. This is also the phase to keep adequate homeowners insurance and consider protections like mortgage or disability coverage that keep payments current if life throws a curveball.

Your servicing & payments checklist

Set up automatic payments to avoid late fees and protect your credit.
Review your annual escrow analysis and plan for payment changes.
Consider extra principal payments to shorten your loan and cut interest.
Track your equity and request PMI cancellation at 80% loan-to-value.
Keep homeowners insurance current and revisit coverage yearly.
Watch interest rates in case refinancing becomes worthwhile.

Frequently asked questions

Why did my monthly mortgage payment go up?: If your payment increased, it's usually because property taxes or homeowners insurance rose, changing your escrow requirement. Your servicer's annual escrow analysis explains the adjustment and any shortage being collected.
How much can extra payments really save me?: Quite a lot, especially early on. Because early payments are mostly interest, extra principal payments in the first years can cut years off your loan and save tens of thousands in interest. An extra-payment calculator shows your exact savings.
When can I stop paying PMI?: You can generally request cancellation once your balance reaches 80% of the home's original value, and it must end automatically at 78%. Paying down principal faster can let you drop PMI years ahead of schedule.