First Payments And Servicing Transfers

Learn everything you need to know about your first mortgage payment, avoiding late fees, paying ahead, managing escrow accounts, and understanding servicing transfers. Get practical tips to stay on top of your mortgage and protect your credit.

Transcript

SPEAKER_00 0:00

Hey everyone, welcome back to All Things Home Loans, Credit, and Real Estate. I'm your host, Deb, the Mortgage Queen. So let's start learning. Hey, it's the Mortgage Queen. I'm here talking about first mortgage payments and servicing transfers. How cool is that? Alright, so let's put it into a real life scenario. Signed the papers, funded the loan, got the keys, took the picture. You're super excited. Get everything moved out of the boxes into your new cupboards and new closets and everything. And now you're thinking, I gotta make my first mortgage payment. How in the heck do I do that? First of all, there's a first payment coupon that usually comes in our closing package, but with all of the craziness that goes on at the closing table, I can totally understand how people miss it. The first payment is always the hardest one to chase, and the nicest thing about it is we have a little bit of a grace period to help us out. And I'm gonna explain a few things that go on with these payments as we go through this. So when we close on the loan, no matter what day of the month that we sign, you have a whole 30 days before the first payment is due. So I'm just gonna use the month of May. I close in the month of May, my first house payment is not due until July 1st. I skip the whole month of June. The reason why, first of all, there's a couple of different reasons why. It takes some time for the servicing rights to get set up, it takes some time for everything to get um transferred from the origination side of the loan process to the servicing side of the process, and it really is just a window of time that just requires behind the scenes efforts going on. Uh, it's kind of an interesting thing when you think about it because I'm paying a July 1st house payment, but I pay June's interest, so you're always paying interest in arrears, and that is just the way that mortgage loans work, and it's just the way that it is. Um, yeah. So depending on um when you close, you skip the first month, and then your first house payment is due the first of the following month. So I close in June, my first house payment is August 1st. I close in July, my first house payment is September 1st, and so on and so forth. If I close on June 30th, my first house payment is August 1st. It's just how it is, and you're always just gonna have that be the situation. Mortgage payments are always due on the first of the month, but most of them have a grace period, which means if you pay it on the 5th, you're just paying a little bit of extra interest, but you're not gonna be showing as a 30-day late, any type of a late payment that way. If it's not posted by the 15th, you're gonna have some sort of a penalty. So it's very critical that if you do have to hover past that first day of the month, just make sure it's posted before the 15th so that you don't just end up getting charged extra money for absolutely no reason other than just being late. No matter what goes on, make sure that mortgage payment is paid and posted before the over before the end of the last day of the month. So my first payment is June 1st, and I decide to make it on June 30th. June 30th happens to be a Saturday. I'm I go on my website that I'm assigned to and I make that payment. I don't really have any way to see whether or not it's come out of the bank account. Maybe it shows as kind of a pending transaction on the system. Well, then here comes July 1st, and that's a Sunday, and now August 1st, that's a Monday. You can call and talk to the servicing company and they say, Oh, yeah, we got the payment, it posted today. Guess what? You might have a 30-day late on your credit report. So no matter what goes on, just make sure that it actually has come out of your bank account and posted before the last day of the month. Ideally, you want to pay it on the first and just have it over with. But at the end of the day, just make sure that no matter what it is posted and the money is out of your bank account before the end of the day through the last day of the month that it's due, or it's gonna hurt your credit. As I've said multiple times, mortgages are your most solid line of credit, in my opinion. You have a 30-day late on it, it's gonna nail your credit scores, kill your credit scores. Especially if you have a brand new mortgage and a brand new car loan and a brand new revolving line of credit and you're just barely new to credit, you do not want to have a mortgage laid on your credit report. It is, oh, it is a terrible, terrible thing. Um, so yeah, with that, you've got the the grace period of the 15 days, you've got that 30-day window of time uh before your payment is due. I always recommend people do this. If you don't have to skip the month of pay the month of payment, don't do it. So if your first house payment comes due June 1st and you moved in sometime in the month of May, you are planning on making some sort of a housing payment, anyways, on June 1st, don't take the month off. Pay your house payment that's due um early. So let's let me put this in a little bit better situation. So I close in the month of May. My first house payment is not until July 1st. I've moved in, I've got everything settled, and now it's June 1st. I don't really have to make a mortgage payment until July 1st, but I'm going to make my July 1st house payment on June 1st. We've now paid our interest basically on time, and we're a payment ahead. That's gonna make a big difference. You'll never see it. You'll never see it, but it's gonna make a big difference if you were to sit down and do all the math calculations with it. It is absolutely worth trying to get yourself a month ahead. The next thing along with that is if your monthly payment is$2,028.37, round it up to$2,100. Right from the get-go, if you mentally make yourself think your house payments$50 higher,$75 higher, eventually that's just what your mortgage payment is. And those little teeny tiny chunks of extra payments make a huge difference over the life of the loan and in interest charges that you've got. So those little things, those little tricks are just very just seems so dumb. Oh, if I add$25 to my mortgage payment, is it really that big of a deal? Yes, it is. It helps a ton. And I would definitely um be tasking you with doing this if you're in your forever home. Absolutely tack on a little extra every single month so that you've got the ability to get that thing paid off as soon as you can so that you don't have a house payment for the rest of your life. I I know there's mixed emotions out there with financial planners and people that say, Oh my gosh, no, leverage everything you've got, have it all maxed out. Yeah, I think for some people that's okay. Uh for me, I find a lot of peace in not having a house payment. I just you just never know what's gonna happen. And if something crazy goes on financially, I could go work at a local research local retail shop and be able to pay my bills if I didn't have a house payment. I just I just think there's a lot of peace in having your house paid off. It's not for everybody, and I understand people leverage their assets for different reasons and and to each their own, but I myself am get your house paid off as fast as you can so that you're secured in being able to have a roof over your head over your head. Um, okay, so let's talk about servicing transfers. There's two different sides of a mortgage loan: the origination side, which is what I do, and all the paperwork that goes on behind the scenes to actually get the loan written. And then that loan is transferred to a servicing department. Uh sometimes internally serviced by us, uh, sometimes they're sell out on the market. And no matter what, the terms of the loan cannot change. If I locked it in as a 30-year mortgage at a 6.5% interest rate, it's a 30-year fixed mortgage for 6.5% for 30 years. It doesn't change. It doesn't get to change. The only thing that changes on your monthly payment is if your taxes and your insurance increase, which they're going to. Historically, home insurance goes up, historically, property taxes go up. Not thousands and thousands of dollars, but they do go up. So you might see your monthly payment adjust just slightly just to uh compensate for those increases on those taxes and insurance. Um, when the servicing does change, it's really important for you to pay attention to your mail and your email, depending on what communication path you decided to go on. There's gonna be a lot of communication. Hey, your loan sold, here's your new loan number, this is the new payment place, this is where you go after this date. You're gonna get it in a mail, you're gonna get probably multiple letters in the mail. Pay attention. Some of them I've had some in my life, and some of them really just they look like spam. And there's been a couple of times that I've torn up some letters, and then I looked at it and thought, wait a minute, I think those are a little bit more important, so I had to put them back together in order for me to be able to uh see what they're all about. So pay attention to your mail. Definitely, uh, a lot of spam mail comes when you purchase a new home, just because that's a high-end area for solicitations to come in and and sales tactics of hey, now you have to buy this, this, and this because we think that it's best for your brand new home, and they're they're smart, they're smart. Um, so yeah, pay attention to those letters that change the servicing rights. And in the event you have any questions on that, um my my office can help out with if we are the originating lender, we can definitely help out. Whoever your loan officer was should be able to help figure out where your servicing rights went to. And but just keep in mind they cannot change the terms of your loan. Once those are fixed on paper, that is what it is. Obviously, if you're in an adjustable rate or some sort of some sort of a home equity line of credit, those are all based off just different caps and margins and such. But uh hopefully, if you're in one of those, you understand it just a little bit. Uh, if you don't understand it and you're kind of new to the adjustable rate mortgage, I certainly hope your loan officer explained all of the ins and outs of that because that's a that's a tricky loan. That is definitely a tricky loan. Um sometimes when you get your mortgage statement, uh, there'll be uh notice of your escrow account. Pay attention to what's going on in your escrow account, those are analyzed at least once a year to make sure that there's a proper amount of money in that escrow account to pay your property taxes and your home insurance. Pay attention to it. If your taxes come due in June and December and you look at your October statement and it says you have$5 in your escrow account, you're not gonna have enough to pay your property taxes. So keep your eyes open on that escrow account. I'm not saying you have to be a rocket scientist and understand all of it, but be aware of taxes come due in June and December in the state of Idaho. Home insurance is paid out once a year. When are those things due? How much money is in my escrow account? Is there gonna be enough there? Yes, escrow accounts are set up for you to kind of pay it and forget it, but you gotta kind of have a little bit of the corner of your eye on it and making sure everything's okay. Of course, if you have questions, reach out because I can definitely answer those questions for you. Um, so yeah, escrow accounts are uh hard on new construction because they have not had a home be assessed yet, and so there's an estimation that we get from the county. Those are definitely ones that you want to keep track of for the first year because all those escrow accounts are a mess if you have a new construction, just because if we beef up the escrow account to make sure that there's enough there, but then when taxes come due and the escrow account is over, then they did a refund, and there's just all this song and dance with it. So keeping a little eyeball on that escrow account is super critical so that you don't just get nailed with a higher payment. You're there's nothing wrong with being a little bit more educated and understanding what's going on with that account. Uh they are regulated, so you can't. I'm I I can't say that something bad can't happen because that's just not the case, but um it's it's pretty hard to mess with an escrow account, they're they're heavily regulated and uh they they can't uh be messed with and uh and not have somebody have some sort of a penalty for that. Um your auto pay is super frustrating for people because we live in an auto pay world. If if you don't have auto pay set up uh in some sort of a form in your life, I just think that's really odd, actually. I can't even finish that sentence, but there's a lot of auto pay. The hard part about your first mortgage payment is it's really hard to set it up on an auto pay because it's sometimes your first mortgage payment has to be made over here to the originating lender, then it's getting sold over here, and the selling of that changes the servicing rights, which means that's gonna change who you make your mortgage payment to. Once it gets settled into that new servicer, that's when you can set up your auto pay. But no matter what, pay attention to your bank account. If you made a payment to where you think it should go and it's uh never come out of your bank account or it came out of your bank account and ended up back in your bank account, just make some phone calls because maybe you did have your servicing rights to transfer and you didn't know. And that information is critical to pay attention to and what's going on in your bank account because if it went out and then it came back in, start making some phone calls and find out why. Well, because maybe they sold the rights to that mortgage loan and they can't take that payment out. Well, then find out who has to um have that payment so that you don't have any 30-day lades. I can't stress enough the importance of making sure that you are uh monitoring your bank account a couple of times a month for heaven's sakes. Just make sure you're looking at what's supposed to be coming out and it's actually coming out, and and and pick up the phone, make some sort of an inquiry if something doesn't look right, or it's not just, well, I made my payment and they kicked it back to me. Not my problem, it's theirs. No, it is your problem. It is your problem, and you get to reap the benefits of a late payment on your credit report by just putting your head in the sand. So double check things, make sure everything's on the uppity up in your bank account, and you don't have more money in it than you should. Your mortgage payment obviously is probably a big chunk of money that comes out. Just make sure it actually comes out. Um your payment will take a couple of days to potentially post. So if you're one that likes to hover on the dark side just a little bit, and maybe you want to make your payment that's due the first of the month, but you don't want to pay a clear till the end of the month, and you post it on the 28th, all right. It could take a couple of days to post. So you absolutely want to make sure you give yourself just a little bit of a cushion for it to actually post. And that is super critical to pay attention to. Um, the servicer uh organizations, they are uh regulated by RESPA, which is a big organization that just makes sure everybody does things right. Uh, it's a good thing. I think there's a lot of pieces of RESPA that are a good thing. Uh, some of them are kind of scratch your head moments, but having the servicing companies regulated by RESPA does put a little bit more uh um rules in place and protections in place that way. Um thing to also watch is when you get notification that your property tax bill comes, you're gonna get a copy of your tax bill. It's it's your tax bill, but if it's in an escrow account, it's confusing to consumers. So if you get that tax bill, it's always worth just double checking on your servicing side that you actually have an escrow account that's paying your taxes. That's super critical. Home insurance, same thing. Make sure your home insurance is paid so you don't get a forced place a forced place insurance uh put on your insurance. So stay in contact with your insurance company. A lot of this comes down to the communication thing, paying attention to what's going on with your statements, paying attention to what's going on with your escrow account, making sure your payments post, double checking your bank account, and making sure that the actual payment comes out, it didn't go back in, and uh watch your mail, watch your email, and actually look at things, review things. If you have any questions, absolutely always here to answer them and help where I can. So, with that, uh servicing, just keep in mind they do transfer, servicing companies merge, servicing companies change. Just be patient, understand that's kind of the nature of the beast. So, anyways, with that, first payments, servicing, escrow accounts, all that fun stuff. Reach out if you have any questions. Have a great day. Thanks so much for listening. I really appreciate it. So stay tuned. We are gonna learn some more next time.