What Is an Annual Mortgage Statement?

An annual mortgage statement is a statement sent to a mortgagor by the mortgagee's servicer. The statement typically indicates the interest paid on a mortgage, the current mortgage balance, the current interest rate, the term of the loan, the amount remaining on the mortgage term, the escrowed taxes and/or insurance that the lender paid on the borrower's behalf, contact information for the lender, and if there are any arrears—or overdue payments—on the mortgage.

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 include a history of payments from the date of the last statement that was issued.

A mortgage statement is provided to the borrower periodically, at least annually, and can be provided to the borrower upon request. The information provided in the statement helps the borrower in taking the correct deductions on their tax return. An annual mortgage statement is also called Form 1098.

Key Takeaways

  • An annual mortgage statement is a document sent to a borrower by the mortgage holder.
  • This statement provides the borrower with key information related to the loan, activity on the account, and the remaining balances owed or other financial obligations for which the borrower is responsible.
  • A mortgage statement is provided to the borrower periodically, at least annually, and can be provided to the borrower upon request.
  • In the United States, the annual mortgage statement is also known as the year-end statement, the mortgage interest statement, or Form 1098.

How an Annual Mortgage Statement Works

Annual mortgage statements are important disclosure documents for the buyer. They are also key financial documents that contain sensitive information. As with other critical documents involving financial matters, anyone preparing or handling these documents should keep them private and ensure security. The recipient must also review this document to ensure its accuracy. Borrowers should compare the annual statement with their records, and report any mistakes or oversights related to the statement, outstanding balance, or payment history to 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. In the United States, the annual mortgage statement is also known as the year-end statement or the mortgage interest statement. It is also referred to as Form 1098.

The Internal Revenue Service (IRS) requires a lender or other business to send an annual mortgage statement to any individual or entity that has paid at least $600 in interest during a specific calendar year. In the case of a mortgage, this form will list the mortgage interest paid and any points related to the loan. Borrowers need this form if they want to claim any related tax deductions for which they may be entitled. Taxpayers would need to consult with their accountant or tax preparer or review the IRS guidelines to find out if the interest they paid is deductible and, if so, how to list this information on their tax return.

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 out 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 in the mail or via email. Mortgage holders can double-check the numbers appearing on their statements by using mortgage calculators that can be easily found online.

Because an annual mortgage statement provides the borrower with information about the time left in the mortgage term, it can be a helpful for a borrower to consider when their mortgage is up for renewal. In other words, it can serve as a helpful alert that you need to start shopping around for a different interest rate if you decide you want to go with a different lender than your current lender.