What does principal curtailment mean on a mortgage statement?

If you’re wondering if you’re subject to principal curtailment don’t panic. It’s not a default. Rather, mortgage curtailment is the process of reducing the amount of the loan that the lender will disburse to you each month. The primary reason for this is to ensure the loan-to-value (LTV) ratio remains below 80% for your personal mortgage.

What is principal curtailment on a mortgage statement?

Principal curtailment is a way for the lender to reduce the amount of the monthly payments required on your mortgage when you miss some payments. The principal, or the amount that you owe, is the sum of the balance of the loan’s principal (the original amount you borrowed, in the case of a mortgage), accrued interest, and any other fees.

What does the term curtailment mean on a mortgage statement?

You’ve probably heard the term “mortgage curtailment” thrown around by your neighbors or the news lately. There’s a reason for that: it has become quite common. If you have a mortgage on your home but don’t make your payments due to a loss of income or reduced income, you could be subject to mortgage payments being taken from the payment you would have received.

What does principal curtailment mean on mortgage payment?

If you have a principal balance on your mortgage that is more than the current market value of your home, you could be considering principal curtailment. It’s a way to reduce your loan balance by a specific percentage, usually 5% or 10%. This lowers your monthly mortgage payment, but it means you’ll owe more on the balance once the loan is fully paid off.

How do you curtail principal on a mortgage payment?

Principal curtailment is a voluntary method that allows you to pay a portion of your mortgage payment each month and have part of the balance owed to your lender paid off. The remaining amount is deferred to the next month’s principal payment. To do this, you will need to contact either your lender or your servicer before making your payment.