If your monthly mortgage payment suddenly jumped by $100, $200, or even $300, it can be alarming—especially if your mortgage rate hasn’t changed. Ben Lucero at Indigo Mortgage has been hearing from New Mexico homeowners who are experiencing significant increases in their monthly payments because of changes to their escrow accounts.

For many homeowners, the first thought is to refinance their mortgage to try to bring that monthly payment back down. But Ben Lucero cautions homeowners not to rush into a refinance before understanding exactly why their payment increased. In many cases, refinancing may not be necessary.

What Is a Mortgage Escrow Account?

An escrow account is commonly used by mortgage servicers to collect money throughout the year for expenses such as property taxes and homeowners insurance. A portion of your monthly mortgage payment goes into this account, and your mortgage servicer uses those funds to pay the bills when they come due.

That means your total mortgage payment can change even when the principal and interest portion of your loan stays exactly the same.

As Ben Lucero of Indigo Mortgage explains, homeowners sometimes assume a higher monthly payment means something has changed with their mortgage loan or interest rate. In reality, the increase may be coming entirely from the escrow portion of the payment.

Why Are Escrow Payments Increasing?

One issue Ben Lucero and Indigo Mortgage are seeing involves increases in property taxes. When property taxes go up, homeowners may not realize how much their housing costs have changed until their mortgage company performs an escrow analysis.

If the servicer determines that the escrow account doesn’t have enough money to cover the property taxes, the account may have an escrow shortage. The mortgage company can then increase the monthly payment to make up that shortage while also collecting enough for future tax bills.

For homeowners already working within a monthly budget, another $100, $200, or $300 per month can create significant financial strain.

That’s when Ben Lucero often gets the call: “Should I refinance?”

Ben Lucero Says a Refinance May Not Be the Answer

Not necessarily.

A higher mortgage payment caused by an escrow shortage doesn’t automatically mean refinancing is the best solution. Your existing mortgage loan itself may still be perfectly fine.

Ben Lucero recommends first determining exactly what caused the increase. If the additional amount is related to an escrow shortage rather than your actual mortgage terms, there may be other ways to address it without replacing your current mortgage.

One potential option is to contact your mortgage servicer and ask whether you can make a lump-sum payment toward the escrow shortage. Paying some or all of the shortage upfront may help reduce the amount that needs to be added to your monthly payment.

Every mortgage is different, so Ben Lucero recommends talking with your servicer and asking them to explain your escrow analysis and the options available for your particular loan.

Your Mortgage Payment May Come Back Down

There is another important point Ben Lucero wants homeowners to understand: an escrow-related payment increase may not be permanent.

When your payment increases because the mortgage company is trying to make up an escrow shortage, part of that additional amount may be temporary. Once the additional collections have caught the escrow account back up, the payment may decrease again.

That’s another reason Ben Lucero advises homeowners to understand the numbers before refinancing. Replacing an existing mortgage simply because of a temporary escrow shortage may not be the best financial move.

Look at the Whole Picture Before Refinancing

Refinancing can be a valuable financial tool when it makes sense, but Ben Lucero and the team at Indigo Mortgage don’t believe homeowners should refinance simply because their monthly payment increased.

A refinance creates a new mortgage. Before making that decision, homeowners should consider the interest rate, closing costs, loan term, monthly savings, and long-term financial impact.

If the problem is primarily an escrow shortage, there may be a much simpler solution.

Talk to Ben Lucero at Indigo Mortgage

If your mortgage payment has suddenly increased and you’re not sure why, Ben Lucero at Indigo Mortgage can help you understand what’s happening before you make a major financial decision.

Start by reviewing your escrow statement and contacting your mortgage servicer. Find out whether the increase is related to property taxes, an escrow shortage, or another change to the account.

Then, talk to Ben Lucero and Indigo Mortgage about your mortgage options. Ben can help you look at your current loan, discuss whether refinancing makes sense, and help you avoid refinancing unnecessarily when another solution may be available.

As Ben’s advice in this situation makes clear, sometimes the best mortgage advice isn’t about getting a new loan. It’s about understanding the mortgage you already have and making an informed decision about what comes next.