Understanding your annual mortgage statement 

In this article: 

• What your annual mortgage statement includes 
• Why the annual statement matters 
• How to read your statement effectively 
• What to do if something looks incorrect 

Each year, homeowners receive an annual mortgage statement that outlines important information about their loan, payments and escrow activity. While the document contains valuable details, it can also feel overwhelming if you aren’t sure what each section means. Taking a few minutes to understand your annual statement can help you track your progress, plan for the year ahead and identify any questions you may have for Desert Financial. 

What is an annual mortgage statement? 

An annual mortgage statement is a summary of your mortgage activity for the previous year. It includes information about your loan balance, payments made, interest paid, escrow account changes and other key details related to your home loan. 

This statement is typically sent at the beginning of the year and should be kept with your financial documents, especially for tax season. 

What your annual mortgage statement includes 

While formatting may vary, most annual statements include the following sections: 

Loan Information Summary: This section lists the basic details of your mortgage. It provides an at-a-glance view of your progress as a homeowner, such as: 

• Original loan amount
• Current loan balance
• Interest rate
• Loan type
• Loan term
• Maturity date

Payment Summary: Your statement includes a breakdown of all payments made during the year. This summary helps you understand how much of your payment goes toward reducing your loan balance versus paying interest, including: 

• Total payments
• Principal paid
• Interest paid
• Escrow contributions
• Additional principal payments (if applicable) 

Interest Paid Report (Form 1098): The annual statement typically includes Form 1098, which shows the total mortgage interest you paid during the year. This form is important for tax purposes if you itemize deductions, so plan to keep this form with your tax documents each year. Form 1098 may also show: 

• Mortgage insurance premiums
• Property taxes paid (manual reporting may be needed depending on your tax filing)

Escrow Account Activity: This section shows deposits and withdrawals from your escrow account for the year. It helps you track how funds move in and out of your escrow account, including: 

• Monthly escrow payments
• Property tax payments
• Homeowners insurance payments
• Mortgage insurance premiums (if escrowed)

Escrow Analysis Summary: Your annual statement may include or reference your most recent escrow analysis, which outlines changes to your payment due to: 

• Property tax increases or decreases
• Insurance premium changes
• Escrow shortages
• Escrow surpluses
• New escrow projections for the coming year

Year-End Loan Balance: Your statement will show the current principal balance remaining on your mortgage. This helps you track your progress toward full repayment. You may also see additional details, such as: 

• Outstanding fees (rare)
• Past due amounts (if applicable)
• Payment application notes

Why the annual statement matters 

Understanding your annual statement helps you make informed decisions about your mortgage and financial planning. Here’s why it’s important: 

• Tracks your equity growth. Seeing how much principal you paid helps you understand how quickly you're building equity. 
• Prepares you for tax season. Form 1098 summarizes your deductible interest and any additional reportable items. 
• Helps you spot changes in escrow. Tax and insurance updates can change your mortgage payment. 
• Shows how additional payments are applied. If you’ve been paying extra toward the principal, you can confirm the impact. 
• Provides a yearly snapshot. It’s a clear overview of your mortgage health and progress. 

Reviewing the statement each year can help you identify trends and anticipate future changes. 

How to read your statement effectively 

Here are a few tips for reviewing your annual mortgage statement: 

• Compare this year’s numbers with last year. Look at changes in principal paid, interest paid and escrow amounts. 
• Review your escrow activity carefully. This section explains most mortgage payment changes. 
• Check for additional principal payments. Confirm any extra payments you made were applied correctly. 
• Verify your interest and tax information. Ensure your records match what you expect to report. 
• Keep the statement for your records. Store it with your annual financial documents and tax forms. 

What to do if something looks incorrect 

If you think something on your annual statement may be incorrect, contact Desert Financial. Most issues can be resolved quickly once reviewed. The most common issues include: 

• Escrow payments not matching your insurance or tax records
• Missing additional principal payments 
• Unexpected changes in escrow projections
• Discrepancies in payment amounts
• Questions about how your payments were applied

When to contact Desert Financial 

We’re always here to support you with clear answers and member-first service. Contact Mortgage Servicing right away at (602) 433-7097 or firstmortgageservicing@desertfinancial.com if: 

• You have questions about any section of your statement.
• Your mortgage payment changed unexpectedly.
• Your escrow analysis seems incorrect.
• You made extra principal payments and want confirmation.
• You need help understanding your Form 1098.
• You want guidance on planning for next year’s escrow changes.