How to Read Your Mortgage Statement

Every month or quarter your loan servicer will send you a mortgage statement. If you have not paid much attention to this document, watch for the next one to come in the mail and take a closer look at it. Why? It contains important information you should know about the mortgage. At first glance, the statement may be overwhelming and appear complicated because of the amount of information it contains, but it is actually very simple to break down. There are eight main parts to the typical mortgage statement.

Customer Service Information

This provides information about how to get in touch with your loan servicer. You will see: phone numbers, fax numbers, mailing addresses, payment addresses, email addresses and hours of operation. There may be information for multiple departments listed. 

Loan Number

The loan number the servicer uses to reference your specific account will be listed on the statement. Having this number on hand will make it easier for the customer service representative to reference your account quickly. It will also prevent them from asking sensitive identifying information over the phone, such as a social security number.

Interest Rate

This is the percentage of the loan amount you are paying back in interest for having borrowed the money to purchase the home.

Taxes Paid/Escrow Account Balance

This shows how much property taxes have been paid for the year by the lender, alongside how much money is remaining in the escrow account. Money needs to be in this account to cover property taxes and insurance throughout the year, every year, until the home is paid off. If paying for taxes and insurance separately, this will not be present on the statement. Nonetheless, most lenders require an escrow account to cover these expenses.

Total Monthly Payment

This shows the total monthly payment for each of the items covered in the payment. Typically, you will see the line by line break down for the principle payment, the interest, the taxes, and insurance. If there is no line by line break down, you will be able to see how your total monthly payment is determined by looking at the following areas on the statement.

Principle Payment

This shows the amount of the monthly payment that goes toward the balance owed on the mortgage, without interest.

Interest Paid

This shows the amount of the monthly payment covering the interest charges associated with the mortgage. 

Escrow

This shows the amount of the total payment that goes toward the escrow account. If taxes and insurance are paid separately from the mortgage, there will not be an escrow account or information on the statement.

The mortgage statement you get from your lender will provide you with valuable information about the condition of your loan. Looking at the statement will quickly show you how much you've paid on the balance of the loan, how much you've spent in interest, and how much you will need to get into escrow before the property taxes are due.

 

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