BIGGEST REASONS YOUR MORTGAGE PAYMENT CHANGES


The mechanics regulating your monthly principal and interest mortgage payment are hardwired into your note. Unless you refinance your current loan, nothing in the note can change. Even if your loan is sold to another lender, the new lender must follow to the letter the requirements of the note. Yet even if you have a fixed rate mortgage where your principal and interest payment doesn’t change. Your monthly mortgage payment might.

If you have an adjustable rate loan, you know in advance that your monthly payment can change. Approximately 60 days out from your annual adjustment period, you’ll get a notice from your lender regarding your new interest rate. You’ll know in advance of this change and expect it. The lender researches the current index upon which your rate is based and then adds the margin, with respect to interest rate caps on the loan.

If you have a hybrid mortgage, a loan where the rate remains fixed for an initial period, you will also receive a notice from your lender reminding you when the fixed period is about to end and what your new rate will be.

If you impound for property taxes and insurance, your monthly mortgage payment will also change along with the adjustments in taxes and insurance. As property taxes go up, so too will your monthly payment. If your insurance premium goes up or goes down, your mortgage payment will also change.

When you first take out a mortgage and select impounds or are required to have them, your lender may require you to fund the impound account with one to two months’ worth of payments. This is done to cover any shortages that might occur during the course of the first few years of the loan. Sometimes the impound account isn’t’ enough to cover the increase. When that happens, lenders will typically make that extra payment on your behalf and then get reimbursed from you directly. Instead of paying a onetime fee, borrowers can elect to spread that onetime payment over a year or so. That will also cause your monthly payment to change.

But remember, what cannot change is your note. When and how your principal and interest payment can change is bedrock. And if you have a fixed rate and you pay your taxes and insurance on your own, your payment will never change for the life of the loan.

For more information or questions about mortgage loans,
Please visit Majestic Home Loan

Or Call  (855) 757-8748

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