What to know if your mortgage payment changed

If you have noticed your mortgage payment changing and are not sure why, you are not alone. Many homeowners are surprised to learn that even with a fixed-rate loan, the total monthly payment can shift from year to year. The reason often comes down to one part of your mortgage that can feel mysterious: escrow.

Understanding what escrow is and how it works can make it much easier to interpret your annual escrow analysis and any changes to your payment. Adam Klick, escrow strategy manager at BOK Financial Mortgage®, helped break it all down:

What is escrow?

Escrow is an account your mortgage lender uses to collect and pay your property taxes and homeowners' insurance. Each month, a portion of your mortgage payment goes into this account to pay those bills on your behalf.

Escrow commonly includes property taxes and homeowners' insurance. Some loans may also include flood insurance or mortgage insurance.

Klick said the most significant benefit of escrow is the peace of mind it provides. "Escrow spreads out high annual costs so you do not have to manage due dates or worry about saving for big bills. It keeps things predictable," he said.

What is an annual escrow analysis?

Generally once a year, your lender reviews your escrow account to make sure it has the right amount of money to cover upcoming bills.

The review looks at:

• What amount was collected
• What amount was paid out
• What amount will be needed for the next year

After the analysis, the lender will send you a notice if your account shows a shortage or a surplus. This process is called an annual escrow analysis.

Your escrow analysis statement shows your deposits, payments for taxes and insurance, year-ahead projections, any shortage or surplus and your updated mortgage payment amount.

Why your payment may have gone up or down

Property taxes and insurance often rise over time. When these costs increase, the amount needed in your escrow account rises, which can cause your payment to be adjusted.

Klick said this is becoming increasingly common. "About 85% of our escrowed customers had shortages reflected on their 2025 escrow analysis," he said. "Taxes and insurance continue to rise, and most homeowners will see some kind of adjustment."

If your account was short last year and costs are expected to rise again this year, your payment may increase more than expected because you are catching up and preparing for the next cycle.

Alternatively, your payment may decrease if taxes or insurance decrease or if more is collected than needed, which can create a surplus refund.

If you have a shortage

A shortage means your escrow account did not have enough money to cover your bills. You usually have two options:

• Pay the shortage in one lump sum
• Spread it out over the next 12 months through a slightly higher mortgage payment

Klick said neither option is better. "Most customers choose the option that best matches their financial goals. It is about finding what works for your budget," he said.

How to help keep escrow costs down

You cannot control rising taxes or insurance markets, but there are a few practical ways to soften the impact on your escrow account:

1. Shop for homeowners' insurance
   Insurance prices have gone up across the country, but comparing rates can still help you find savings. Reviewing your policy once a year can ensure you have the right coverage at the best available price.


2. Return insurance refunds to escrow
   If you switch homeowners' insurance mid-year, your previous insurer may send you a refund. It can feel tempting to keep it but sending that refund back to your lender to replenish your escrow account is important. Otherwise, your analysis next year will show a shortage even if your new policy costs less.


3. Check your property tax exemptions
   Make sure your county has applied every exemption you qualify for. Common examples include:
   • Homestead
   • Senior
   • Disabled veteran
   These exemptions can make a noticeable difference in your annual tax bill, and they are often easy to confirm with your county assessor.


4. Review your property valuation
   If the value your county assigned to your home does not seem accurate, you may be able to challenge it. Many counties allow homeowners to dispute their valuation during a specific window each year. Taking a few minutes to review your notice can help ensure you are not paying more in taxes than you should.

What to know about escrow if you don't own a home yet

If you are thinking about buying a home, remember that escrow can be part of your total mortgage payment. Your first payment may be the lowest you ever make, since taxes and insurance usually rise over time. Building room into your budget for those adjustments can make homeownership more manageable. Klick estimates that homeowners can generally expect a 5-7% annual increase in escrow costs.

Need help?

If you are confused by your escrow analysis or worried about paying your updated mortgage amount, reach out to your lender. Early conversations create more options.

"An escrow increase is rarely the result of someone doing anything wrong," Klick said. "The broader economy usually drives these changes. Your mortgage lender is here to help you understand what is happening and explore options that may improve affordability."