It’s surprising to me how often people ask me about automatic payments. Something which, in the grand scheme of the mortgage process, seems so inconsequential can really get some people thinking. But while I consider the mortgage process from a processing and underwriting standpoint, the payment piece becomes the long-term concern for the borrower. So with that in mind, I will give you my thoughts on automatic payments.

I don’t think there is any greater feeling than the freedom of not worrying about paying your bills. And because the mortgage is, for most, the most important bill, it is also the bill which can alleviate the most stress if taken care of automatically month to month. So from a practical and convenience standard, it is nice to have the security of automatic payments. If you can set up bi-monthly payments to help chip away at your principle, you can take time off your mortgage, as well, which is a real added benefit when buying a house.

On the other side of that, however, is the fear of not having the money in your account to cover the automatic payment. If an unexpected expense comes up or a holiday forces a direct deposit to hit your account late, it can be a nightmare to rectify the situation, and can cost you money in fees. You also need to consider what will happen if your loan is sold. When loans change from one bank to another, the automatic payments must be changed. This can create an issue for a few months where no one can be sure if your automatic payments will work or not.

What I have seen work quite nicely is an arrangement where an automatic payment comes on the last day you can make a payment (usually the 13^th or 15^th of the month) only if a payment has not already been made. So you have the comfort to know a payment will be made if you forget, but you can still try to time the payments around direct deposits.

Whatever your decision, just remember that it is not permanent; if you want to change it, you always can.

If you have any questions about the mortgage process and getting qualified for a mortgage, please contact me. If you have any other useful advice relating to automatic payments, please leave a comment.