Banks and mortgage companies, or loan servicers, send out a mortgage statement each month that contains key information for all borrowers. These statements are typically sent as paper documents through the mail, with the option to choose online access for those wishing to go paperless. Beyond showing the last payment made and next payment due, figures typically highlighted right up front in larger font, statements are useful reference tools for many other details including customer service numbers and websites.
A loan servicer may change contact information or the original loan may be sold to others, so the statement first lists the current contact information, including name, physical and email addresses, phone number and web address. Servicers generally make every effort to be accessible to borrowers, not only to answer questions, but to encourage those having difficulty making payments to call for arrangements and to keep the lines of communication open. The loan number is generally listed up front as well, for easy reference to use when paying by check or online, as well as for customer service. The mortgage's interest rate may also be prominently displayed, a crucial figure not only for those who may look to refinance but to keep track of adjustable rates.
The mortgage statement lists the last payment made, next payment due and any late fees applied. Loan servicers typically build in a grace period before charging a late fee, but borrowers should heed this information, as late payments not only incur sometimes hefty fees but are reported to the national credit bureaus and will damage credit scores. The statement also reveals how previous payments were applied to the loan's principal, interest amount and escrow, to give an up-to-date picture each month.
The escrow account represents a critical component of the mortgage loan, as it is used to pay property taxes and the premiums for homeowner's insurance. As these are mandatory payments built into nearly all primary mortgages, loan servicers require them to ensure compliance with the law and to protect themselves in the event of disasters such as fires or floods. A late payment on the escrow account is treated on par with the mortgage payment itself and is subject to credit reporting and late fees.
Some mortgages come with flexible or adjustable payment terms, and statements can show the minimum due, interest-only payment and amounts to pay for those using the 15-year or 30-year option. Additional information includes any deferred interest amounts, unpaid late fees or escrow adjustments and listings of Internet resources of general interest to homeowners. Statements also represent a way to keep track of pending payment or interest-rate increases, such as a loan with a low introductory rate for three, five or seven years that then converts to a higher fixed rate.
Robert Rimm graduated from the University of Pennsylvania and founded 88keys.com to provide education, writing and communications services for clients within the nonprofit, arts and education communities in the United States, Europe and Russia. His key interests include art and culture, social entrepreneurship, education, the environment and human rights. He is fluent in French and Russian, and is a widely published author.