Grace notices that her fixed-rate mortgage payment to the servicer increased by $85 this year even though her note rate did not change and she did not refinance. What is the most likely reason?
Correct Answer
B) Her escrow portion changed because taxes or insurance increased
On a fixed-rate mortgage, the principal-and-interest portion generally stays the same. However, the total amount paid to the servicer can change when escrowed items such as property taxes or homeowners insurance increase, which makes an escrow change the most likely reason.
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