How to Read a Mortgage Statement

September 19, 2009 | Posted by Staff

One of the simplest and yet most important thing you can do to protect yourself from losing your home is to keep up to date on the terms of your mortgage agreement. By reading your mortgage statement monthly you will be aware of your payment status and be able to quickly respond to changes. If you are unsure of how to read your mortgage statement or trouble understanding any aspects of your home loan you can contact your lender for help.

If you have never before looked at your mortgage statement or are confused by some of the terms you see there below is a quick introduction. All of the terms listed are important concepts in the mortgage industry and you should be familiar with them all if you wan to own your own home.

Escrow Account – this is a special account that holds a homeowners regular payments to be used for taxes and insurance until due

Fixed Rate Mortgage – a mortgage agreement with a fixed, or unchanging, interest rate for the entirety of the loan

Forbearance – this is when a lender postpones legal action in response to a borrowers delinquency and is normally issued only after the borrower and lender have agreed to reconciliation terms

Foreclosure – this is the term for the legal process whereby a property or home is sold and the money generated by the sale is used to pay down outstanding mortgage debt. This happens when a borrower stops making payments on the mortgage or otherwise defaults

Foreclosure Prevention - a process by which the lender and borrower work together to develop a satisfactory solution to present or future mortgage delinquency

Hazard Insurance – this is insurance that us usually needed with some mortgage contracts and serves to reimburse for damage to a property or home

Home Equity Line of Credit -this is a financial instrument that allows homeowners to borrow against the equity in their home, the proceeds can be used to pay for college expenses or remodeling

Interest Only Mortgage – this is a type of mortgage where the borrower is only required to pay the interest on the loan and not the principle for a set time period

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