If you’ve been making your mortgage payment via U.S. mail every month, it might be time to update your technology now that most lenders offer easier, cheaper, faster and more reliable ways to pay.
Here’s a look at pros and cons of the various methods of making a mortgage payment:
Making a mortgage payment through the bank’s or loan servicer’s website is “probably your best option,” says Ron Haynie, executive vice president of mortgage finance policy for the Independent Community Bankers of America, a trade group in Washington, D.C. The online process allows you to control the timing of the payment and create a traceable record. Online payments are efficient and usually free.
“It takes a couple of minutes to set up,” Haynie explains. “But once it’s set up, it’s done. You just go (into the website) each month, put in the amount, hit the button and it happens — your payment gets posted.”
Online mortgage payments are preferred by loan servicers and benefit customers as well, adds Jerald Banwart, senior vice president of customer operations at Wells Fargo Home Mortgage in Des Moines, Iowa.
“We love electronic payers,” Banwart says. “Customers who want to be in control of the process can go online and do it themselves.”
Automated withdrawals from your bank account are even simpler and more convenient than online mortgage payments because no further action is required after the repeating transactions are set up in the loan servicer’s system, Haynie explains. Payments are credited quickly and traceable payment records are produced. There is a downside: You can’t vary the date on which the mortgage payment will be withdrawn from your account each month.
“You need to make sure that once you set the payment to go out, your paycheck will be there to cover it,” Haynie says. “If it bounces, you’ll be dealing with overdraft charges, late charges and things of that nature.”
A third option is to call the loan servicer and speak to a customer service representative who can enter your mortgage payment into the processing system, Banwart explains. The telephone number should be on the monthly statement.
A mortgage payment made by phone usually can be credited immediately, according to Haynie. That’s a plus if you have to make a payment quickly to avoid a late charge. The downsides are that some servicers charge a convenience fee for this option and transactions via cellphone can be thwarted by technical difficulties, such as a dropped call or depleted battery.
Check in the mail
Sending a check via the U.S. Postal Service still “works pretty well,” too, Haynie says.
The advantages are that you’ll know you mailed the mortgage payment, you’ll have a record of the check once it’s cleared, and you won’t have to worry about technical difficulties because most servicers provide pre-printed envelopes and payment coupons. Yet there is a risk your check might be lost in the mail, and you’ll have to pay for postage stamps. The cost might seem small, but can add up over 15 or 30 years.
Always write your loan account number on any paper check, even if the number is printed on your coupon. If you don’t have a coupon, you might be able to print one from your loan servicer’s website to help ensure your mortgage payment is properly credited.
Checks that turn up without a coupon or loan number can be troublesome because “someone has to stop, look up your account number and make sure it gets applied correctly,” Banwart explains. “There’s going to be a delay, and you now have a person in the middle of that process.”
If your mortgage loan servicer has brick-and-mortar branches, you can also walk into any of those locations in person and make a payment in cash or by check or withdrawal from your account.
Some borrowers mail money orders. Haynie says that’s not a good idea because a lost or stolen document can be difficult to trace, giving you no proof that you tried to make a payment.