You’ve submitted all your financial documents, completed your paperwork and secured your new home loan or refinance. Pop some champagne and celebrate all that you have accomplished! Though this may feel like the end, it’s actually just a stop on your homeownership journey.
Whether you’ve just moved into your dream home, purchased a second home or secured more favorable terms through a refinance, your trusted loan advisor will remain with you as your mortgage partner. They will be on hand to provide you with annual mortgage reviews, financial checkups, and assist you if you decide it is time to refinance or purchase a new or second home.
In the interim, a mortgage servicer will assist in the collection and disbursement of your monthly mortgage payments.
What is a Mortgage Servicer?
That’s a good question! While a loan advisor helps you get approved and secure your mortgage terms (among many other things), a mortgage servicer handles the administrative tasks of your loan, which include receiving payments, sending monthly statements, and managing any escrow accounts that were setup with your mortgage.
The mortgage servicer is responsible for disbursing:
- Principal and interest payments to the lender or investment entity that owns the mortgage
- Taxes to the county/state governments
- Homeowner’s insurance to the insurance company
- Private mortgage insurance (PMI) to the mortgage insurer (if applicable)
Why Do I Need an Escrow Account?
Escrow accounts take some of the responsibility off homeowners, who would otherwise have to remit multiple monthly payments to each individual stakeholder. This is particularly burdensome as these organizations have varying due dates. For example, property taxes are typically due twice a year, while your homeowner’s association and insurance companies will have their own annual renewal deadlines.
Missing or falling behind on property taxes or HOA payments can also result in liens and unnecessary fines. By utilizing an escrow account, your mortgage servicer can make sure each portion of your monthly payment is routed to the correct entity on the correct time schedule. This saves you from having to do the legwork!
Will My Mortgage Change if it’s Sold or Transferred?
It is not uncommon in the mortgage industry for loan servicing to be transferred from your initial lender to another company. This is otherwise referred to as a mortgage servicing transfer. These transfers can occur at anytime – sometimes even before the first mortgage payment has been submitted.
This new mortgage servicer could be another lender, a bank, investor or a third-party processing company that specializes in mortgage servicing. Though your mortgage servicer may change, the terms of your loan – including your monthly principal, interest rate, due date and other conditions – will all remain the same. The only tangible change for you may be where you send your monthly mortgage payment. This information should be provided to you in a letter you receive from your old and new mortgage servicers.
It’s always a good idea to call and confirm your current servicer if you receive a notice of transfer letter in the mail. This allows you to verify the letter’s authenticity and certify that the information your new servicer has is correct.
When Should I Contact My Mortgage Servicer?
Since your mortgage servicer handles the collection and disbursement of your monthly loan payments, you’ll want to contact them anytime you have a question or concern regarding your payment schedule.
Your mortgage servicer’s contact information should be printed on your monthly mortgage bill and statement. Reach out to them if you suspect you may have trouble paying your mortgage, or if you’re in danger of missing a payment.
A mortgage servicer can work with you to come up with a solution that ideally benefits all parties – but they can’t help you if they don’t know you need it! Early and open communication is almost always the key to addressing an issue like a late payment before it becomes a major problem.
You may also contact your servicer if you have questions about paying down (or off) your loan early. They can help you apply additional principle payments correctly to ensure the loan is paying down as expected. Another scenario could be looking to eliminate PMI from your payment when eligible.
Your loan advisor is also there to answer any questions you may have and help you navigate any changes to your lifestyle or finances.
Will I Ever Hear from My Mortgage Servicer if I Don’t Contact Them?
Though they may not have a standing Monday morning check-in call with you, mortgage servicers will send you an annual mortgage escrow statement that outlines what your mortgage payment covered. It will show you which percentage of your payment went to the principal, interest, insurance(s) and taxes. You can also request these statements anytime by contacting your mortgage servicer directly.
As can be expected, your mortgage servicer may also be in touch if your loan becomes delinquent. A servicer’s top priority is to keep the homeowner in the home, however, so it pays to work with these individuals as they offer their assistance. As always, your loan advisor is also available anytime you need them. They’re happy to discuss all your housing-related needs, including refinancing and second home purchases.
There’s a lot going on behind the scenes during the loan servicing process. Thankfully, all you have to worry about is paying your mortgage on time while mortgage servicers take care of the rest.
Have a question about loan servicing or mortgage servicers? We’re here to help! Give APM a call anytime to discuss these questions, along with any others you may have.