Tuesday, March 17, 2009

Check My Mortgage

For a homeowner, mortgage interest payments may total up to hundreds of thousands of dollars over the course of paying off the home loan. Because of such a large financial commitment, it is critical that you know check your mortgage. To monitor your mortgage, you must first organize your home loan paperwork. From there, you can identify the basic terms of the home loan agreement so you can calculate your mortgage principal and interest payments.


Instructions


1. Organize your important mortgage documents. This paperwork includes your original mortgage contract, your most recent monthly mortgage bill and the Internal Revenue Service's Form 1098 (Mortgage Interest Statement). Form 1098 summarizes your mortgage interest payments for the prior tax year.


2. Locate your lender's contact information on your most recent mortgage bill. This monthly bill should include information on reaching customer service by telephone, regular mail and online. You can contact customer service representatives for help with more complicated mortgage matters.


3. Check the mortgage principal on your monthly mortgage bill. This is the amount of your loan that is left to be paid off. Initially, your mortgage principal and down payment should equal your home's original purchase price. The principal should fall with each mortgage payment.


4. Understand that your home loan is either a fixed- or adjustable-rate mortgage (ARM). A fixed-rate mortgage charges the same interest rate throughout its term. An ARM, however, has a variable rate that can rise or fall according to the prevailing interest-rate environment. Your mortgage contract should either state a fixed interest rate or work through the calculations for your ARM rates.


5. Review your mortgage amortization schedule. This schedule calculates how your mortgage principal and interest payments break down over time.


6. Divide your monthly mortgage payment into one principal and interest payment alongside one escrow account deposit. Escrow account deposits go toward property taxes and private mortgage insurance (PMI), if applicable. Property taxes provide for local services, while PMI protects your lender against losses when borrowers take out loans that exceed 80 percent of their new home's value. PMI pays cash settlements to the bank in case you default on your mortgage.


7. Check your mortgage payment schedule. The mortgage payment due date usually will fall on the first of the month but has a 15-day grace period. You will be responsible for a late fee if the lender has not received your full mortgage payment by the time the grace period expires. After 30 days of missed payments, your mortgage can go into default.


8. Make your monthly mortgage payment through the mail, online or by visiting your local bank branch. You can receive immediate confirmation that your payment has been received when you log on to your online account. The confirmation should also calculate the smaller amount of principal that remains to be paid off.


9. Use IRS Form 1098 as a reference when completing your taxes. Annual mortgage interest payments can be itemized and deducted from your taxable income.







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