August 19, 2022

10 Things to Look for on Your Mortgage

The entire home buying process is a learning experience, and the truth is, you never stop learning once you become a homeowner. Staying informed is so important, especially when it comes to your mortgage. When your first monthly mortgage statement arrives, you’ll notice there is a lot of information to digest – but don’t fret. We’re going to highlight the different sections and what you should be looking for below.

It’s important to note that your monthly statement may vary slightly, depending on your loan servicer. The following details are those that you’ll see most commonly, so use this as a guide when reviewing your individual statement.

1. Customer service details

You’ll typically find this information listed at the top of your statement so you can easily get in touch with your loan servicer if needed. Whether there’s a mistake on your statement, you need help understanding information, or if you think you’ll have trouble making your payment in a timely manner, contacting customer service right away is key to successfully managing your home loan. Don’t see it on the front of your statement? Be sure to check the back, as some loan servicers place additional info there.

2. Loan information

Another section you’ll see near the top contains your account number, property information, interest rate, and loan type. These details – specifically the account number – are needed in order to access your loan information when contacting customer service.

It’s also wise to keep an eye on your interest rate and compare it to the current market interest rates – in some cases, it may be advantageous to refinance your home if the current rate is significantly lower.

3. Monthly payment summary

This summary breaks down the monthly payment that is due so you’ll know exactly how your payment is being appropriated. Usually, you’ll see the following information in this section:

  • Principal and Interest – The principal is the actual amount of your loan, and the interest is calculated based a percentage of the loan amount.
  • Escrow – It’s common for tax and insurance funds to be placed in an escrow account, rather than you having to pay these things separately each month.
  • Past Due Balance – If you have an overdue balance for any reason, it will be carried over into the next month and reflected here.
  • Other Balances – This is where any other fees or credits would be reflected.
  • Total Due – This is the amount you are expected to pay for the month, which includes principal, interest, taxes and insurance (PITI), any overdue amounts and the inclusion of any other credits or fees.

4. Principal + interest balance

In this section, you’ll find the total amount that is still owed on your home to date. This number may seem overwhelming, especially if you just purchased your home – but it will steadily decrease over time with each mortgage payment.

5. Escrow balance

Your mortgage company will review your escrow account annually to make sure you’re paying enough for your taxes and insurance for the year. If your property tax or insurance increases or decreases in the new year, your loan servicer will recalculate your total payment and send you a notice ahead of time to alert you of the change.

6. Year-to-date payments

This information provides a snapshot into how much you’ve paid so far in the current year toward principal, interest and your escrow account.

The amount of interest paid for the year will be especially relevant come tax time since you’ll be able to deduct that amount from your taxes.

7. Transaction activity

Here, you’ll be able to view a breakdown of your past payments and how the funds were allocated between principal, interest, taxes, and insurance. This can help you better understand your total payment and how you’re paying down your principal balance.

8. How to pay

Now, for one of the most pertinent pieces of information: how to pay your monthly bill. Most loan servicers provide several convenient ways to make your payment, including:

  • You’ll likely find that visiting your loan servicer’s website is the easiest way to pay your monthly balance. Many even offer an automatic withdrawal option, so you can choose a date for the payment and it will occur at the same time each month.
  • Via phone. You can contact customer service and speak with a representative or use an automated system to make your payment.
  • Via check. Many mortgage companies include a detachable payment coupon that you can mail in along with a check for the payment amount.
  • In person. If your loan servicer is local, you can also stop by the office and pay via check or credit card.

Most loan servicers will also provide details about credit reporting, late payments, and instructions for making changes to your name, address, or phone number on your statement. Visiting your loan servicer’s website can also provide you with valuable information that may not be covered on your printed statement.

Loan terminology glossary

The terms and definitions that follow are meant to give simple, informal meaning for words and phrases you may see on our Web site that may not be familiar to you. The specific meaning of a term or phrase will depend on where and how it is used, because the relevant documents, including signed agreements, customer disclosures, internal Program policy manuals and industry usage, will control meaning in a particular context. The terms and definitions that follow have no binding effect for purposes of any contracts or other transactions with us. Your Campus Housing Programs Representative or the Office of Loan Programs staff will be happy to answer any specific questions you may have.

To find a definition, click the first letter of the term.

ACH:(see Automated Clearing House)

Amortization: Loan payments by equal periodic amounts calculated to pay off the debt at the end of a fixed period, including accrued interest on the outstanding balance.

Amortized Loan: A loan to be repaid, by a series of regular installments of principal and interest, that are equal or nearly equal, without any special balloon payment prior to maturity.

Anniversary Date: The date upon which the twelfth payment is due. This occurs in the same calendar month and day each year thereafter on any MOP Promissory Note.

Annual Percentage Rate (APR): A percentage rate that reflects the amount of interest earned or charged. 

Applicant: An eligible Appointee designated by one of the ten University campuses, Office of the President or, LBNL as eligible to apply for a loan under the UC Home Loan Program.

Application Checklist: An itemized list of documentation that the borrower and the campus need to provide to the Office of Loan Programs for either pre-approval or loan approval. Also known as form OLP-09.

Appointee: A person who has been offered and has accepted a full-time position with the University of California.

Appraised Value: The dollar value assigned to a single-family residence by an appraiser approved by the Office of Loan Programs.

Automated Clearinghouse (ACH): An electronic funds transfer network that enables direct money transfers between participating bank accounts and lenders. This feature is available only to borrowers who are not currently on active payroll status.

Balloon Payment: An installment payment on a promissory note – usually the final one for discharging the debt – which is significantly larger than the other installment payments provided under the terms of the promissory note.

Beneficiary: The lender on the note secured by a deed of trust.

Borrower: An eligible person as specified in an executed Certification of Eligibility, prepared by the appropriate campus representative, who will be primarily responsible for the repayment of a Program loan.

Bridge Loan: A temporary loan, usually less than 12 months, provided to a borrower when the net proceeds from a sale of a prior residence are not available for the purchase of a new home. It is intended that a bridge loan will be paid off with the net proceeds from the prior residence’s sale.

Close of Escrow: The meeting between the buyer, seller and lender (or their agents) where the property and funds legally change hands.

Certification of Eligibility: Form signed by campus representative certifying that the applicant is eligible for Program participation and the amount of the loan allocation. Also known as form OLP-30.

Community Property: Property acquired by a married couple, or either spouse in a married couple, during marriage, when not acquired as the separate property of either.

Co-Borrower: Any individual who will assume responsibility on the loan, take a title interest in the property and intends to occupy the property as their primary residence.

Co-Signer: Any individual who will assume responsibility on the loan, but who will not take a title interest in the property nor occupy the property.

Curtailment: An additional payment made to reduce the principal balance of a loan.

Current MOP Rate: MOP rate currently in effect for Program loans.  The “locked-in” MOP rate will be the Program rate in effect at the time of loan commitment.  This rate is calculated by using the most recently available four-quarter average earnings rate of the University of California’s Short-Term Investment Pool (STIP), plus an administrative fee component of 0.25%, subject to the applicable minimum interest rate. Also known as the Standard Rate.

Date of Recordation: The date on which a deed of trust is officially entered on the books of the county recorder in the county in which the property is located.

Deed of Trust: A security instrument, used in place of a mortgage, conveying title in trust to a third party covering a particular piece of property. It is used to secure payment of a promissory note.

Default: Failure to fulfill a duty or promise as specified in the Promissory Note and/or Deed of Trust.

Deferred Payment Loan: A loan which allows the borrower to defer all the monthly principal and interest payments until the maturity date of the promissory note, at which time the outstanding principal loan balance and all accrued interest is due and payable.

Downpayment: The difference between the purchase price of real estate and the loan amount. The borrower is responsible for providing the funds for the downpayment.

Employee: An Appointee who has actively begun to serve in his or her full-time position.

Equity: The difference between the fair market value of a property and the current indebtedness secured on the property.

Escrow: A situation in which a third party, acting as the agent for the buyer and the seller, carries out the instructions of both and assumes the responsibilities of handling all the paperwork and disbursement of funds at settlement or at closing.

Escrow Holdback: Funds retained by the escrow company after the close of escrow until repairs and/or required termite work has been completed.

Evidence of Insurance: Written documentation from a hazard insurance company that a homeowners’ policy is in existence on a property. Typically, this is NOT an insurance policy, but a commitment from the insurance company to provide a policy for a specific property at a specific time and premium amount

Faculty Recruitment Allowance Program: A University of California program authorizing the granting of special housing allowances to assist with down payments, mortage payments, and other housing related costs. The assistance may be paid in one lump sum or over a period not to exceed ten years in equal, unequal, or declining balance amounts. The maximum assistance amount is indexed based upon salary increases for faculty. The eligible population for the program is full-time University appointees who are members of the Academic Senate or who hold equivalent titles and Acting Assistant Professors. Campuses have the option to require repayment of a portion of the housing allowance in the event that the recipient leaves University employment prior to a specified date. (Formerly known as the Salary Differential Housing Allowance Program).

Final Settlement (or Closing) Statement: A financial disclosure giving an accounting of all funds received and disbursed at loan closing. Also known as HUD 1 Closing Statement.

Graduated Payment Mortgage: The Graduated Payment Mortgage (GP-MOP) is an alternative loan product under the Mortgage Origination Program (MOP) that results in an initial lower interest rate (Borrower Rate) than the most recently published MOP rate (Standard Rate). The initial Borrower Rate is stated as a percentage below the Standard Rate, subject to a 3.25% minimum rate. The stated reduction in the Standard Rate is known as the Interest Rate Differential. The Interest Rate Differential is established to decrease annually between 0.25% to 0.50% until such time as the Borrower Rate equals the Standard Rate.

Gross Monthly Income: The monthly salary amount before taxes, withholdings, and expenses.

Hazard Insurance: A contract where an insurer, for a premium, undertakes to compensate the insured for loss on a specific property due to certain hazards. (See Homeowner’s Insurance Policy).

Home Improvement: Repairs and/or additions made to better the status of the permanent structure of the primary residence.

Home Loan Coordinator: The person designated by the Chancellor of each campus and Laboratory Director as the Home Loan Coordinator. This individual serves as the primary contact at the campus level for loan applicants.

Homeowners Association: An organization of homeowners residing within a particular development whose major purpose is to maintain and provide community facilities and services for the common enjoyment of the residents.

Homeowner’s Insurance Policy: An insurance policy available to owners of private dwellings that covers the dwelling and contents in the case of fire, wind damage, theft, and, personal liability. The typical policy does not include flood or earthquake coverage.

Impound: That portion of the mortgagor’s monthly payments held by the lender to pay for property taxes or hazard insurance premiums as they become due. The University does not impound for either property taxes or hazard insurance premiums.

Inspection Reports: Reports ordered by the borrower to assess the quality of the home. Typically, this includes a Termite Report and “whole house” inspection. Other reports that may be ordered include roof, foundation, geological, and, septic tank inspections.

Interest: Consideration in the form of money paid for the use of money, usually expressed as an annual percentage. Also, a right, share or title in property.

Interest-Only Payment Loan: A non-amortizing loan in which the lender receives interest during the term of the loan and principal is repaid in a lump sum at maturity.

Interspousal Transfer Deed: A deed between two married individuals that relinquishes all, or a portion of, the interest, title, or claim in a property by the grantor. Also known as Quit Claim Deed. 

IRS 1098 Mortgage Interest Statement: A statement provided by the lender to the borrower indicating the total amount of interest paid by the borrower for a given calendar year.

Joint Tenancy: Joint ownership by two or more persons giving each tenant equal interest and equal rights in the property, including the right of survivorship. 

Lender’s Escrow Instructions: Instructions produced by the Office of Loan Programs for an escrow or title company detailing the documentation and procedures required before a loan is funded.

Loan-to-Value (LTV) Ratio: The ratio of the principal balance of a mortgage loan to the value of the securing property, as determined by the purchase price or Appraised Value, whichever is less.

Loan Commitment:  A loan commitment letter (also known as “loan approval”) issued by the Office of Loan Programs (OLP) committing to the funding of a Program loan for a specific borrower and property.   A loan commitment letter will only be issued after OLP’s satisfactory review of all property documentation (i.e. purchase contract, property appraisal, inspections, etc.) and will state the approved loan amount, initial interest rate and loan term.  The letter will also require that certain conditions are met prior to loan funding.  The initial interest rate specified will be the Program rate in effect at the time a loan commitment is issued.  A loan commitment expires within 60 days of date issued.

Loan Denial letter: A letter from the Office of Loan Programs denying a loan to a specific individual. The reasons for denial may include credit history, lack of verifiable liquid assets, inadequate income, etc.

Loan Underwriting: The analysis of risk and the decision whether to make a loan to a potential homebuyer based on credit, employment, assets, and other factors.

Loan Withdrawal letter: A letter from the Office of Loan Programs acknowledging that a borrower no longer wishes to pursue a loan from the University of California. A loan may be withdrawn due to dissatisfaction with the property or desire to use another lender, among other reasons.

MOP-Calculator: A web-based calculator for potential applicants to determine whether they might meet the minimum requirements for a MOP loan.

Mortgage Origination Program (MOP): MOP was established by The Regents of the University of California in 1984 and utilizes funds from the unrestricted portion of the University’s Short-Term Investment Pool (STIP) to make variable interest rate first deed of trust loans of up to 30 years in length to eligible Faculty and members of the Senior Management Group. The program provides loans at maximum amounts of 80% to 90% of value, depending upon loan size, with the initial interest rate equal to the most recently available four-quarter average earnings rate of the University of California’s Short Term Investment Pool (STIP), plus an administrative fee component of 0.25%, subject to the applicable minimum interest rate. The maximum annual adjustment of the interest rate for a loan, upward or downward, is one percent.

Mortgagee: A lender or creditor who holds a mortgage or Deed of Trust.

Mortgagor: A borrower who is obligated to pay on a mortgage or Deed of Trust.

Net Income: The monthly salary paid to a borrower after deducting any Federal and/or State payroll taxes.

Notice of Completion: Documentation, typically from a termite company, stating that required repairs have been completed. Sometimes called a “clear” termite report. May also refer to work completed by a contractor for other, non-termite related work done on a property.

Office of Loan Programs (OLP): Located within the Office of the President’s Capital Asset Strategies and Finance Department, the Office of Loan Programs is responsible for the design, delivery and management of housing assistance programs for recruitment and retention of faculty and senior managers. 

Overall Debt to Income Ratio: The ratio, expressed as a percentage, which results when a borrower’s total monthly debt, including the proposed mortgage principal, interest, taxes & insurance and all recurring monthly debt (such as credit card payment, student loan, mortgage, and auto loan), is divided by the gross monthly income. The maximum allowable overall ratio for MOP loans is 48%. 

Participant: The term “Participant” shall mean an Appointee who has been designated as an eligible Applicant and Primary Borrower.

Pre-approval: Certificate of Pre-Approval issued by the Office of Loan Programs that states a borrower’s credit, assets and income have been verified and the applicant qualifies for a Program loan at a specified amount and interest rate.  At the time of pre-approval, the specified initial interest rate is not “locked-in” and is therefore subject to change prior to the issuance of a loan commitment letter.  The initial interest rate will be the Program rate in effect at the time a loan commitment is issued.

Preliminary Disclosures: A generic term referring to a group of disclosure forms required by Federal law to be sent to a loan applicant. The forms include a Loan Estimate Disclosure, Fair Lending Notice, and a California Credit Disclosure.

Preliminary Title Report: A title search by a title company prior to issuance of a title binder or commitment to insure, required during the processing of a loan.

Prepaid Interest: Mortgage interest that is paid from the date of the funding to the end of that calendar month.

Primary Residence: A dwelling where one actually lives and is considered as the legal residence for income tax purposes.

Principal: The amount of debt, exclusive of interest, remaining on a loan.

Principal and Interest to Income Ratio: The ratio, expressed as a percentage, which results when a borrower’s proposed Principal and Interest payment expenses is divided by the gross monthly household income. The maximum allowable ratio for MOP loans is 40%. Also known as P&I ratio.

Processing: The preparation of a mortgage loan application and supporting documents for consideration by a lender.

Program: The term “Program” refers to any loan made under a University of California Home Loan Program.

Purchase Transaction Documents: The aggregate term for independent third party documentation pertaining to the subject property. This includes property appraisal, termite inspection report, preliminary title report, real estate transfer disclosure, roofing, geological, foundation, septic inspections, and overall home inspection.

Reconveyance: The transfer of the title of land from one person to the immediate preceding owner. This instrument of transfer is commonly used to transfer the legal title from the trustee to the trustor after a deed of trust has been paid in full.

Refinancing: The process of paying off an existing loan and establishing a new loan.

Renovation: The restoration of the primary residence. Generally, this includes repairs, improvements and additions to the permanent structure of the primary residence.

Reserves: Liquid or near liquid assets that are available to a borrower after the mortgage closes. Reserves are measured by the number of months of the qualifying payment amount for the subject mortgage (based on Principal & Interest) that a borrower could pay using his or her financial assets.

Right of Rescission: The right to cancel a contract and restore the parties to the same position they held before the contract was entered into. For a refinance transaction, a borrower has three working days from the signing of the loan documents to cancel the loan without penalties. The right to rescind does not apply to purchase transactions.

Servicing: The collection of payments and management of operational procedures related to a mortgage loan. All MOP loans are serviced by the Office of Loan Programs.

Short-Term Investment Pool (STIP): STIP was established in fiscal 1976 and is an interest-only cash investment pool in which all University fund groups participate, including current funds earmarked to meet payrolls, operating exprenses, and construction at all campuses and teaching hospitals of the University.

Standard Rate: The most recently available four-quarter average earnings rate of the University of California’s Short-Term Investment Pool (STIP), plus an administrative fee component of .025%, subject to the applicable minimum interest rate.

Subordination Agreement: An agreement by the holder of an encumbrance against real property to permit that claim to take an inferior position to other encumbrances against the property. The University may, as its option, refuse to sign a Subordination Agreement.

Tenants in Common: Joint ownership by two or more persons giving each tenant an interest and rights in a property, these interests need not be equal in quantity or duration.

Title: The evidence of the right to or ownership in property.

Title Insurance: A policy, usually issued by a Title Insurance company, which insures a homebuyer and the lender against errors in the title search. The cost of the owner’s policy is usually a percentage of the sales price and the lender’s policy is a percentage of the loan amount.

Trustee: One who holds legal title to a property for the benefit of another, or for the purpose of securing performance of an obligation.

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