Understanding Your Mortgage Statements
If you have a mortgage, you’ll receive your statement every month with crucial information that tells you how much you owe. Unfortunately, most people set up automatic payments and forget about their mortgage statements, never even reading them.
Unfortunately, ignoring the information on your mortgage statement can be a mistake. This piece of paper tells you about more than just your current balance. Reading your statement can provide you with essential information about your loan, including how quickly you’re paying it off.
Reviewing your mortgage statement can tell you when there’s been a change in your mortgage servicer and allow you to check for mistakes that can impact your financial health. So what is a mortgage statement, and why should you read it? Keep reading to learn more about home mortgage statements and how to understand the information on yours.
What Is a Mortgage Statement?
A mortgage statement is a document your lender provides that contains details about the loan, including payments. Like any other type of bill, you’ll receive a monthly mortgage statement with current details about your loan, such as your balance, interest rates, and payment breakdown. In addition, some lenders may provide additional information, such as recent payment history. However, mortgage statements typically contain the same information regardless of lender.
Mortgage Statement Breakdown
So what does a mortgage loan statement look like? All mortgage statements are required to include the same basic information and be formatted similarly. According to the Consumer Financial Protection Bureau (CFPB), all mortgage statements must include essential information about the loan and lender. Therefore, your statement will look the same if you have a conventional, Non-QM, VA, FHA loan, or any other type of home loan. Here are some crucial pieces of information you can find in your statement:
Mortgage servicer contact information
Your mortgage servicer is subject to change as mortgages are frequently sold on the secondary mortgage market. Knowing who your lender is can help you understand who to contact if there’s a problem with your statement or you need information from them. The home mortgage statement will include your lender’s name, phone number, address, and website.
Your mortgage loan is tied to an account number your lender needs if you ever contact them about your mortgage. Of course, there are other ways for them to identify you as a borrower, but providing your account number is the easiest and can help you get in touch with someone who can answer your questions much faster.
The amount due is the full payment due on the due date stated on your mortgage statement. This total includes principal, interest, escrow, and associated fees. Mortgages are similar to rent and many other bills due on the first of the month, but your lender may give you a grace period of up to two weeks past the due date before issuing a late fee.
Near the amount due, you’ll see the due date for the payment, and many lenders may provide a late payment date with another figure that tells you when you’ll be charged a late fee and how much that late fee will add to your balance. Pay your mortgage on time every month to avoid hefty late fees that make your loan more expensive.
The outstanding principal amount is the amount you still owe on your mortgage. Every payment you make reduces your principal balance, so you should see this number decrease monthly.
Your interest rate is based on the mortgage rate you locked in during the loan approval process and depends on whether you have an adjustable vs fixed-rate mortgage. If you have a fixed-rate mortgage, the interest rate will be the same every month. However, if you have an adjustable-rate mortgage (ARM), you should pay close attention to your interest rate because it is subject to change. Your loan servicer will notify you of any interest rate changes, but it’s still essential to pay attention to it on your mortgage loan statement since it can drastically affect the cost of your monthly bill.
Past payment and transaction activity
Past payment and transaction history can help you see how last month’s payment was applied to the loan and help you track how much money you’ve spent on each part of your mortgage. It can also ensure you’ve continued to pay in full every month and haven’t missed any payments.
If you have an escrow account, your lender may include its balance on your mortgage statement to help you determine whether you need to add more money. Lenders typically require an escrow account when they’ll be paying property taxes and homeowners insurance on your behalf, so if it doesn’t contain enough money, you may fall behind on your bills.
If you’re more than 45 days late on your payment, your next mortgage loan statement might include a delinquency notice, meaning you must pay your bill as soon as possible. If you don’t pay your mortgage after 120 days, the lender can begin foreclosure. If, for any reason, you can’t pay your mortgage on time, it’s crucial to talk to your lender as soon as possible.
The Importance of Reading Your Statements
Many people treat their mortgage statements much like their bank statements; they may open them but never get around to actually reading them and ultimately toss them in the trash. However, it’s crucial to read your mortgage statement every month because it can provide you with important information about your loan and help you catch errors or mistakes when they occur. So why should you read your monthly mortgage statement? Here are a few reasons:
- To plan for interest rate increases: If you have an ARM, your interest rate will change throughout the life of your loan. Your lender is required to send you a notice in the mail about any interest rate changes and how they’ll affect your monthly payments. However, it’s crucial to continue checking your mortgage statement’s interest rate to prepare for increases that can affect your budget.
- To shop for new insurance: If you have a fixed-rate mortgage, very few factors can contribute to an increase in your monthly payment. However, your amount due might increase if your homeowner’s insurance costs have increased. Reviewing your mortgage statement can help you catch any cost increases that ultimately affect how much you pay for your home. If they get too high, you can shop for a new homeowners insurance provider.
- A new loan servicer: Mortgage loans are frequently sold to other companies, and reading your mortgage statement can help you determine where your money is going when you make a payment. Your loan changing servicers won’t affect your balance or any other aspect of your loan. However, you’ll need to change who you send your payment to every month. Apart from the change in servicer information on the mortgage statement, you’ll receive a notice in the mail telling you that your loan servicer has changed and where to send your payments. Additionally, there is a grace period for sending payments if you accidentally send them to your old servicer instead of the new one. If you send it to the wrong servicer, they may forward it to the correct company or send it back with another notice about your loan servicer changing.
- Mistakes: Every month, you should review your balance, interest, escrow payments, and fees. Your outstanding principal balance should decrease every month because you’re paying off the loan. Unfortunately, mortgage loan servicers can make mistakes, so checking your mortgage statement can help you catch clerical errors before they become significant problems.
How long should I keep my mortgage statements for?
Having your mortgage statements on hand can help you determine how quickly you’re paying off your loan and ensure you have the proper documentation in case there’s ever a mistake or misunderstanding between you and your lender. However, after reviewing your mortgage statement and checking it for accuracy, you can typically shred it once you receive a new one since it will be more up-to-date.
Since the information on monthly mortgage statements changes monthly, you typically don’t need this information throughout the entire life of the loan, but it’s a good thing to have on hand in case you need to make a dispute. In addition to your monthly mortgage statements, you’ll receive an annual mortgage loan statement from your lender that will provide you with more documentation on your interest rate, loan term, outstanding balance, insurance paid on your behalf, and late payments. As long as your monthly mortgage statements are accurate, you can choose to keep only the annual statements.
Stay on Top of Your Mortgage Statement
Reading your monthly mortgage statement to check for accuracy can help you plan your budget and catch errors before they become significant problems. Most mortgage bills are due at the beginning of the month, but there’s usually a 15-day grace period before lenders will consider it late. If you haven’t already, you should set up automatic payments with your loan servicer to ensure you pay your mortgage bill on time every month.
However, even if you pay automatically, you should continue to read your mortgage statement to check for accuracy, review your interest rate, learn when your loan servicer has changed, and avoid costly late fees. Griffin Funding can help you stay on top of your mortgage statement and bills by allowing you to make monthly payments via mail, phone, or direct deposit. Our mission is to serve our customers, so if you have any questions about your mortgage statement, contact us immediately.
- “The Federal Register.” Federal Register: Request Access, https://www.federalregister.gov/documents/2018/03/12/2018-04823/mortgage-servicing-rules-under-the-truth-in-lending-act-regulation-z.
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