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Regardless of which loan modification program you choose to apply for, there is one document you will need to read and understand well: your mortgage statement. Unfortunately, most mortgage providers do not make an effort to make this documents particularly reader-friendly. They invariable use terms and expressions which you will probably never hear unless you are in the mortgage business. However, loan modification applications require borrowers to provide information they can only find in their mortgage statement.
This article will describe the typical sections and terms used in mortgage statements. Although there are many mortgage servicers and they all use slightly different formats in their mortgage statements, they are similar enough for a general summary to be useful regardless of which mortgage servicer you are dealing with.
Mortgage Servicer Contact Information
This is found at the top right of the statement. It includes the company’s address, name, phone number and in some cases it will even specify the loan officer who processed your loan. This information is important because this is the address you will need to send loan modification application.
Mortgage servicing companies have thousands of clients. It may sound harsh but for them you are just a number, whatever their adverts say. You need your loan number as a reference so your mortgage servicer can identify you and your loan modification application. This number is usually at the top right of the statement, directly below or above the mortgage servicer’s contact details.
You cannot know if a mortgage modification is a good deal for you unless you know what rate you are paying now. It is surprising how many homeowners do not know what their current interest rate is, even though this rate is the main factor—together with your mortgage balance—that determines the cost of your mortgage payments. The interest rate of your mortgage will be in the Summary section of your statement.
One of the quickest ways of losing your home is to stop paying property taxes. Your mortgage statement provides you with the total amount paid toward property tax for the year and how much is left in the escrow account to cover these expenses. More on what an escrow account is below. You can usually find the total taxes paid and the balance of your escrow account in the Summary section below the interest rate and the interest paid to date totals.
Total Monthly Payment
Government mortgage aid programs focus on the affordability of a loan modification and how much better off a borrower will be after the modification. These is mostly determined by the total monthly payment you have before and after the mortgage modification. The total monthly payment includes all types of payments related to the mortgage, such as insurance, taxes and interest as well as the payment of the mortgage principal. This figure is usually the last line on the Summary section of the statement.
Borrowers can choose to send money every month to a special account as part of their monthly payment. This account is used to pay for additional expenses related to the mortgage, such as taxes and insurance. Mortgage statements include the monthly amount sent to the escrow account as an item in the “Activity since your last statement” section, which is usually at the bottom of the page below the Summary section.
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