A mortgage report is a document that contains important information about your loan. Most lenders issue monthly mortgage reports to borrowers that include the current loan balance, recent transactions, payment breakdown, and other loan information.
It’s easy to overlook your mortgage reports if you receive electronic reports or have automatic payments set up. You may miss important information, such as a pay increase or a change in your loan servicer if you do so.
What is the definition of a mortgage report?
Mortgage lenders are required by law to issue a mortgage report to borrowers for each billing cycle of their loan. Each mortgage report contains current loan information, such as the principal balance, interest rate changes (if applicable), current payment amount, and payment breakdown.
The appearance of mortgage reports, as well as the content on them, used to vary widely between lenders. However, the Dodd-Frank Act, which was enacted as a direct reaction to the financial crisis of 2008, changed that. Mortgage servicers are now required to use a standardized model for mortgage reports that include individual loan information. Below are some information usually provided:
The information regarding your loan servicer will appear first on your mortgage report. This is the bank or organization that gives you your monthly mortgage report (or coupon book) and takes care of your payments. (It’s worth mentioning that this isn’t always the same firm that originally closed your loan.) The name, address, website, and phone number of the company are usually given here.
The number on your mortgage loan account identifies the loan as yours. You’ll need to supply your account number if you need to contact your loan servicer with a question or an issue.
This is self-explanatory: it’s the deadline for making your mortgage payment. Most lenders give you a grace or courtesy period — generally two weeks — before marking your payment as late.
If you don’t pay before the due date, your payment is considered “late.” However, as previously said, you will normally be given a two-week grace period. The phrase “if received after date” alludes to the end of the courtesy period, after which a late fee will be charged. This date is frequently listed alongside the payment due date and the amount payable.
The principal of a loan is the amount borrowed at the outset. A percentage of your monthly payments goes toward paying down the principal or repaying the loan itself. On a mortgage report, the principal is referred to as “outstanding principal” or “principal balance,” among other terms. This is the amount of your original principal debt that you still owe.
The expense of borrowing money is called interest. Most of your early mortgage payments will go toward interest costs rather than principal due to the amortization process.
The interest rate on an adjustable-rate mortgage (ARM) may alter over time. Your loan servicer will offer you an estimate of the new payment seven to eight months before the first adjustment if your mortgage term is more than one year. If your ARM has been reset previously, the servicer is required to tell you two to three months prior to the next adjustment.
Paying attention to this section of your mortgage report allows you to prepare for an increase in your mortgage payment. Some debtors, for example, may want to refinance into a new loan.
Your mortgage payment breakdown explains how your loan servicer will split your payment. The principal, interest, escrow account (for property taxes and homeowners insurance payments), and late fees, if any, will all be deducted from each payment. Some mortgage bills include a breakdown of mortgage payments for the current and previous billing cycles.
The portion of your payment that goes toward loan-related fees like property taxes and homeowner’s insurance is known as escrow. Although your loan servicer will usually make these payments from your escrow account once or twice a year, some will need you to pay in monthly installments. This assures that when the payments are due, the whole amount will be available. Escrow is not included in all mortgage payments, however. If your lender allows you to pay these costs directly, you’ll need to budget for them and pay them directly.
The maturity date refers to the deadline for repaying your mortgage loan. This information may or may not be included in the mortgage report by some servicers.
If you pay off your mortgage early, some lenders charge you a fee. A prepayment penalty is usually charged when you pay off your entire balance in a set number of years, according to the Consumer Financial Protection Bureau (usually three or five). While extra principal payments in small monthly amounts are usually exempt from the penalty, check with your lender to be sure. If you’re thinking about refinancing your mortgage and your current loan contains a prepayment penalty, make sure to account for it in the total cost of refinancing.
A place underneath your loan details on your report is reserved for any additional information your loan servicer wishes to provide. This could include information on how to locate a housing counselor or what to do if you are unable to make your payments. Depending on your circumstances, this section of the mortgage report may also give additional resources. If you or a member of your family served in the military, you may be eligible for benefits and protections under the federal Servicemembers Civil Relief Act (SCRA).
What are the benefits of reading your mortgage report?
It’s critical to read your monthly mortgage report. You’ll be notified ahead of time if your interest rate rises or your escrow payments alter. You can also be able to discover difficulties like overdue or delinquent payments, as well as inaccurate late charges.
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