Managing Your Monthly Mortgage Payments

From the moment you apply for a home loan to the very last line you sign on your closing documents, your lender, real estate agent, and a plethora of other professionals will be right beside you. Once the dust settles and you're officially in your new home, you may be wondering, "What comes next?" Now, it's time to manage your mortgage!

Your Monthly Statement

Each month, you will receive a statement with all the information you need to pay your mortgage. Within your statement, you will find:

• Contact information for your mortgage servicer
• Amount due (and due date)
• Interest rate
• Fees and charges

It's imperative that you thoroughly review your statement each month, even if the amount you owe has not changed. Your servicer will include important information about upcoming changes or fees in your monthly statement.

Depending on your lender, automatic payments may be an available option for you. Some lenders still provide loan coupon books to help you make accurate payments on time. In most cases, the coupon book is not a requirement to make payments, but rather a helpful tool. If your lender provides a coupon book that you do not plan on using, notify them beforehand just as a precaution.

Reasons Your Mortgage May Change

There are multiple reasons why your mortgage could increase or decrease. So, before you decide to request more information from your servicer or take the time to report an error, consider the following:

Did your taxes or insurance increase? Because escrow is collected in advance, your lender might not have enough funds in your account to cover any increase in taxes or insurance, otherwise known as a "shortage." In this case, you will owe the difference. However, you won't be held responsible for this payment until the bank sends you a notice stating the amount outstanding.

Are you no longer paying PMI? Unlike with FHA and USDA* loans, which almost always require MI for the life of the loan, on a conventional loan, the Mortgage Insurance (MI) comes off if you are paying it monthly. Mortgage Insurance will automatically cancel when your loan balance reaches 78% of the original value of your home.

Did your servicer change? Residential mortgages are generally large loans that are serviced by large institutions. These loans may transfer hands, and therefore, the scheduled payment you make may need to be switched to a new company and/or address on occasion. This is very normal if you continue to have a loan in place for an extended period. If you notice that your mortgage payment has increased, but no other variables have changed, your new servicer may likely charge new/different fees than your previous servicer. You can find information about payment increases on your monthly mortgage statement.

Has the interest rate changed on your ARM? Adjustable-rate mortgages (ARMs) have a fixed rate for a certain number of years. After the introductory period ends, rates will fluctuate with the market, meaning they can rise higher if mortgage rates rise, causing higher monthly payments. Rates can also decrease with an ARM, allowing payments to go down.

Reporting an Error on Your Mortgage

Under the law, errors such as incorrectly applying or crediting payments, imposing unreasonable fees, and improperly starting a foreclosure sale may all be disputed. If you believe your servicer has made an error and you'd like to dispute it, you can start by calling your servicer using the information provided on your monthly mortgage statement. However, the Consumer Financial Protection Bureau recommends having all requests and responses done in writing.

You may need to submit a letter to your mortgage servicer to explain the errors you have found. When sending a letter, you should include the following information:

• Full legal name
• Home address
• Mortgage account number
• The error or incorrect information on your most recent payment

TIP: Your servicer may have a different mailing address for letters reporting errors or requesting information. Find more contact information for your servicer online or on your mortgage statement.

Your servicer must send a letter acknowledging your note within five business days of receiving it. However, the time it takes for your servicer to respond to the actual error will vary based on the situation. Typically, they will respond with an answer or request additional information within 30 business days. In some cases, the servicer may request another 15 days to investigate the error. In the meantime, continue paying your mortgage as if everything is normal.

For more information about requesting additional information, rather than reporting an error, start here.

Questions? We're always here to help. Connect with a licensed Mortgage Advisor in your area.

*Some state and county maximum loan amount restrictions may apply.