What happens after the closing process for your home’s mortgage? Mortgage companies seldom talk about the process after your loan closes or what borrowers need to know after they sign the home loan.
Today, most mortgages are not serviced by the company that funds the mortgage. Mortgages are usually sold on the secondary market to investors. Those investors pay servicing companies a fee to manage the borrowers’ payments. When you make your monthly mortgage payment, it’s one of those servicing companies that you send the monthly loan payment to.
Mortgages rarely stay with the same servicer throughout the life of that mortgage. If (or more likely, when) your mortgage is sold to another servicer, that company cannot charge you any sort of fee to do so, and servicers also cannot change or modify any part of the original mortgage terms.
Your payment will only change if your property taxes increase or decrease, or your home owner’s insurance increases or decreases. Those changes would require more to be funded to, or disbursed from, your escrow account, but you’ll be notified in advance if that needs to happen.
Each year, borrowers will receive an escrow reconciliation statement from their mortgage servicer. It discloses whether the escrow account is short on funds, which can happen as property taxes increase; if taxes have decreased, and your escrow account has more funds than anticipated, a refund will be issued to you. If you receive a letter saying your escrow account will be short of funds, we suggest you pay the shortage instead of having the monthly payment increase, as this will minimize the payment increases each year going forward.
There is much more to cover on mortgage servicers and escrow accounts so look for our other blogs on this topic. If we can help with your Colorado mortgage, please call Indigo Mortgage Colorado.