Annual Mortgage Statement Definition

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Annual Mortgage Statement Definition

What Is an Annual Mortgage Statement?

An annual mortgage statement is a letter the mortgagee’s servicer sends to the mortgagor. The statement typically includes the amount of interest paid on a mortgage, the current mortgage balance, the current interest rate, the loan term, the amount of time left on the loan, the escrowed taxes and/or insurance that the lender paid on the borrower’s behalf, the lender’s contact information, and whether there are any arrears—or past-due payments—on the mortgage.

Key Takeaways

  • The mortgage holder will provide an annual mortgage statement to the borrower.
  • This document gives the borrower important details about the loan, account activity, and any outstanding debts or other financial responsibilities that the borrower is accountable for.
  • The borrower receives mortgage statements on a regular basis—at least once a year—and may request one at any time.
  • The yearly mortgage statement is also referred to as Form 1098, the year-end statement, and the mortgage interest statement in the US.

How an Annual Mortgage Statement Works

Annual mortgage statements are prepared by the mortgage lender. These records are prepared once each year and given out to borrowers. The purpose of the annual mortgage statement is to provide the borrower with key information related to the loan, activity on the account, and information about other financial obligations for which the borrower is responsible. A mortgage statement may also provide a history of payments from the date of the previous statement that was published.

Note

An annual mortgage statement is not the same as an amortization schedule, which breaks down how payments are applied to principal and interest over the life of a loan.

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Mortgage statements can also be issued monthly as a periodic statement or provided to the borrower upon request. The information provided in the statement helps the borrower in taking the correct deductions on their tax return if they hope to deduct interest paid to the loan.

Annual mortgage statements are important disclosure documents for the buyer. They’re also key financial documents that contain sensitive information. Therefore, it’s important to verify their accuracy and store them securely. For example, borrowers should compare the annual statement with their records, then report any mistakes or oversights related to the statement, outstanding balance, or payment historyto the lending institution right away so that a corrected statement can be issued, if necessary.

Borrowers should store mortgage statements safely and, if requesting clarifications for any of the calculations with their lender, they should request those clarifications in writing. Most financial institutions now make annual mortgage statements, along with monthly statements and other account information and updates, accessible so that customers can easily access them online and print them for their records.

This offers additional convenience because borrowers can review and print their statements as soon as they are available, without the need to wait for this paperwork to arrive via mail or email. Mortgage holders can double-check the numbers appearing on their statements by using mortgage calculators that can be easily found online.

Components of an Annual Mortgage Statement

The year-end statement or mortgage interest statement are other names for the yearly mortgage statement in the US. It’s also known as Form 1098.

  Mortgage Calculator

Any person or corporation that has paid at least $600 in interest during a certain calendar year must get an annual mortgage statement from a lender or other company, per the Internal Revenue Service (IRS). This form will include any points associated with the loan as well as any mortgage interest paid in the event of a mortgage. To claim any relevant tax deductions to which they may be entitled, borrowers must use this form. To determine if the interest they paid is deductible and, if so, how to include this information on their tax return, taxpayers would need to speak with their accountant or tax preparer or check the IRS rules.

What then is on Form 1098? Important information concerning your mortgage loan includes:

  • The lender’s name and address
  • The lender’s tax ID number
  • Name and address of the borrower
  • The borrower’s tax ID number
  • number of properties used to secure the loan
  • The annual amount of mortgage interest that the borrower paid
  • Outstanding mortgage principal
  • Mortgage origination date
  • Refund of overpaid interest
  • Mortgage insurance premiums
  • Points paid when the house was purchased
  • Mortgage acquisition date

You will need this form in order to deduct mortgage interest from your taxes. To get the most out of your mortgage interest tax advantages, make sure you submit your information accurately when you file your return.

Important

Contact your lender to ask for an amended Form 1098 document if you do not get your yearly mortgage statement or if you do and it is inaccurate.

Annual Mortgage Statement Example

You may not yet be acquainted with what an annual mortgage statement looks like if you just just bought a house. It’s crucial to keep an eye out for your Form 1098 as tax filing season approaches. Here is how this form appears prior to the addition of the pertinent data by your mortgage lender.

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Form 1098.

Internal Revenue Service

What is an annual mortgage statement?

A yearly statement that contains vital information regarding a mortgage loan is known as an annual mortgage statement. This covers the most current loan balance as well as payments made toward the principle, interest, and escrow.

What is required on a mortgage statement?

Your statement should include information about how to contact your mortgage lender, payment breakdowns, and any details regarding past-due payments if you’ve fallen behind in payments in addition to information about your mortgage loan, such as the principal, interest, and any fees or escrow withholdings.

Do I need mortgage statements for taxes?

If you are claiming the interest on a house loan as a tax deduction, mortgage statements are not required. To document the amount of interest you paid on the loan for the year, you should instead include Form 1098: Mortgage Interest Statement with your tax return. Every year, Form 1098 should be sent to you by your mortgage company.

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