There’s a lot of literature out there about how to find the right mortgage the first time, but what about after you get your mortgage? There are many things that you have to be aware of so that you can protect yourself and avoid getting ripped off after you have your mortgage and are writing your monthly checks to the bank.
Chances are your mortgage will have many different owners and servicing bureaus throughout its life, and it’s very common for some sort of error to occur with your loan balance. You can protect yourself by creating an amortization schedule and make sure the balance reported by the mortgage company agrees with what you believe it should be.
Keep a copy of every check you write that pays on your loan. This way you can demonstrate exactly how you paid in and when you paid it in so that there’s no dispute as to what your balance should be.
If you have a question or issue with your loan, make sure you get the full name of the person that you speak with. This will give them at least some level of accountability in the answers that they give you.
Take a close look at how much money your bank collects in addition to your mortgage payment for your property taxes and insurance. Lenders can legally collect your escrow needs plus 1/6th this amount of money, but many banks and lenders will intentionally over-collect this money so that they can get use of your money interest free.
It’s always a great thing to prepay on the loan. All you need to do is contact your lender and ask what process is for making a prepayment. This will save you thousands in interest by the time your loan is paid off. If you do prepay your loan, make sure that the bank is processing the additional payments properly. Many banks incorrectly apply payments as principal and interest instead of just principal which will cost you quite a bit of money over a period of time.
Many mortgage companies are offering plans that charge you $3000 to $500 to setup a prepayment system. These plans will pay off your mortgage early, but you can do the same thing without writing a check to your mortgage company or one of their marketing partners.
If you reach the point where you have 20% equity or above in your home, you can save a lot of money by asking your mortgage company to drop the private mortgage insurance (foreclosure insurance) on your home.