If you get paperless mortgage statements or have autopay set up on your home loan, or even if you get statements in the mail, it might be easy to miss important information.
By paying close attention to exactly what’s included in your mortgage statements, you’ll avoid unpleasant surprises.
What Is a Mortgage Statement?
Maybe you became well versed on mortgage need-to-knows.
And you did the hard work of calculating your mortgage size, qualifying for a mortgage, and getting that loan.
Now comes the mortgage statement, a document that comes from your mortgage loan servicer. It typically is sent every month and includes how much you owe, the due date, the interest rate, and any fees and charges.
In the past, the information that was included and the format of a mortgage statement ran the gamut among lenders. Thanks to the Dodd-Frank Act, enacted in 2010, mortgage servicers must include specific loan information and follow a uniform model for mortgage statements.
Statements also include information on any late payments, how much you’ll need to pay to bring your balance into the green, and any late fees you’re dinged with. You can also find customer service information on your mortgage statement.
What Does a Mortgage Statement Look Like?
A mortgage statement has similar elements as a credit card or personal loan statement. As a picture is worth a thousand words, here’s a sample mortgage statement, courtesy of the Consumer Financial Protection Bureau:
What Is on a Mortgage Statement?
Deciphering what’s on a mortgage statement can help you know what to look for, how much you owe in a given month, how much you’re paying toward interest and principal, and how much you’ve paid year to date.
Let’s dig into all the different parts of a home loan statement.
This usually can be found at the top of your mortgage statement and is how much you owe for that month. Besides the amount, you’ll find the due date and, usually, the late fee you’ll get hit with should you be late on payment.
Explanation of Amount Due
This section breaks down why you owe what you owe. You’ll find the principal amount, the interest amount, escrow for taxes and insurance, and any fees charged. All of those will be tallied for a total of what you’ll owe that month.
Past Payment Breakdown
Below the section that explains the amount due, you’ll find a breakdown of your past payment: the date the payment was made, the amount, and a short description that may include late fees or penalties and transaction history.
This is typically located on the top left corner of the mortgage statement and contains your mortgage loan servicer address, email, and phone number should you need to speak to a customer service representative. Note that like student loan servicers, a mortgage loan servicer might be different from your lender.
Your mortgage loan servicer processes payments, answers questions, and keeps tabs on your loan payments, and how much has been paid on principal and interest.
You probably know what escrow is. If you have an escrow account, your mortgage loan servicer is tasked with managing the account.
Your account information includes your account number, name, and address.
If you’re late on a mortgage payment, within 45 days you’ll receive a notice of delinquency, which might be included on your mortgage statement or be a separate document. You’ll find the date you fell delinquent, your account history, and the balance due to bring you back into good standing.
There might be other information such as costs and risks should you remain delinquent. There also might be options to avoid foreclosure. One possible tactic is mortgage forbearance, when a lender agrees to stop or reduce payments for a short time.
Understanding the Details
Your mortgage statement includes many details, all to help you understand what you’re paying in interest, the fees involved, and what your principal and interest amounts are. It’s important to look at everything to make sure you understand what information is included. If you have trouble deciphering the information, call your mortgage servicer listed on the document.
If you have an adjustable-rate mortgage, the mortgage statement also might include information about when that interest rate might change.
Important Features to Know
Besides the main parts of a mortgage statement, here are a few other key elements of a mortgage statement.
As mentioned, you’ll receive a delinquency notice within 45 days should you fall behind on payments.
Besides how much you owe to get back in good standing, the delinquency notice might also include your account history, recent transactions, and options to avoid foreclosure.
If you have an escrow account for your mortgage, the balance will show how much you owe in homeowners insurance and property taxes.
Note that this is different from how much money you have in your escrow account and how much money is collected, which is typically included in your annual escrow statement.
If you don’t have an escrow account, your taxes and homeowners insurance owed will usually be separate lines.
Using Your Mortgage Statement
Now that we’ve covered all the elements of a mortgage statement, let’s go over how to use your mortgage statement and make the most of it.
Making Sure Everything Is in Order
Comb through your mortgage statement and make sure everything is accurate and up to date. Inaccurate information can lead to overpaying, potentially falling behind on payments, and headaches.
Keeping It for Documentation
How long do you need to hold on to your mortgage statements for documentation?
Keeping Annual Mortgage Statements
While you might not need to hold on to your mortgage statements for too long, make sure you have access to your annual mortgage statements for a longer period of time. In case you run into an IRS audit, you’ll be required to provide documentation for the past three years.
Making Your Payment
There are a handful of ways you can make payments on your mortgage.
Online. This is probably the most common and simplest way to submit a mortgage payment. It’s free, and once you set up an account online and link a bank account to draw payments from, you’re set. You can also set up autopay, which will ensure that you make on-time payments. In some cases, you might be able to get a discount for setting up auto-debit.
Coupon book. A mortgage servicer might send you a coupon book to use to make payments instead of sending mortgage statements. A coupon book has payment slips to include with payments. The slips offer limited information.
Check in the mail. As with any other bill, you can write a check and drop it in the mail. However, sending a payment by snail mail might mean that your payment doesn’t arrive on time. If you are going this route, send payments early and consider sending them via certified mail.
How Long Should You Keep Mortgage Statements and Documents?
Just as you’d want to hold on to billing statements for other expenses, you’ll want to keep your mortgage statements in case you find inaccuracies down the line. Plus, the statements come in handy for tax purposes and for your personal accounting.
So how long should you keep your mortgage statements? Because you can find your statements online by logging in to your account, you don’t need to hold on to paper statements for long. In fact, you can probably get rid of paper copies if you have access to them online. It might be a good idea to download the documents to your computer.
Other documents, such as your deed, deed of trust, promissory note, purchase contract, seller disclosures, and home inspection report, you should keep as long as you own the home.
Consider holding on to annual mortgage statements for several years, and in a safe place. It’s a good idea to store them on your computer and have hard copies on hand.
It’s easy to gloss over mortgage statements, but not knowing what’s in them every month and not noticing any changes can result in costly mistakes. It’s also eye-opening to see how much of a payment goes to principal and how much to interest.
If you’re shopping for a home or home loan, you might want to consider an online mortgage application with SoFi.
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Photo credit: iStock/Tijana Simic
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