Why Setting Up Autodraft Could Be a Smart Move
Managing your mortgage doesn’t have to be a hassle. One of the easiest ways to stay on top of your payments—and potentially help you avoid costly fees—is by enrolling in automatic payments, also known as autodraft.
Understanding Autodraft
Autodraft is a payment method that automatically deducts your mortgage payment from your bank account on a date you choose. Once it’s set up, you don’t need to log in to pay or mail a check. It could greatly simplify the process of making your monthly payment.
Why Use This Option?
Here are a few reasons why autodraft might be a good idea:
- It could make life easier: No need to log in to pay, wire a payment or mail it in. Your mortgage is paid automatically each month.
- Simple to set up: You can enroll in monthly, semi-monthly or bi-weekly payments through your online account. Sign in, select your Loan Number to go to Account Details, then navigate to Payments and hit Schedule Recurring Payments. Enter your bank account information, save it and you’re done!
- Can help avoid late payments: So long as you connect autodraft with a funded account and schedule payments for a date when you know you will have adequate funds in that account, you can minimize the chance your payments will be late. This in turn help you avoid fees and potential credit damage.
- Safe and reliable: Payments are processed through the Automatic Clearing House (ACH) network, a federally regulated system used by banks nationwide. It’s encrypted and safer than mailing checks.
Payment Frequency: Pick Your Preference
You can choose a payment schedule that fits your income cycle:
- Monthly: One full payment on the same day each month.
- Semi-Monthly: Two half-payments each month, typically aligned with a twice-a-month paycheck.
- Bi-Weekly: Half-payments every two weeks, resulting in 13 full payments per year—one extra that goes toward your principal. This schedule syncs well with an every-other-week pay cycle. The additional payment each year directly reduces your loan’s principal balance, which could result in interest savings over your loan term.
Things to Keep in Mind
- Check your balance: Always make sure your account has enough funds before the draft date to avoid overdraft or returned payment fees.
- Timing matters: If your budget is tight, consider scheduling your draft a day or two after your paycheck hits your account.
- Double-check your info: Enter your bank account and routing numbers carefully. Mistakes can lead to missed payments.
- Review your statements: Keep an eye on your monthly mortgage statements to confirm your payments are processing correctly.
Pro Tip
Keep a small buffer in your bank account to cover unexpected delays—like a late paycheck or emergency expense. That cushion can help you avoid missed payments and extra fees.
The Bottom Line
Autodraft is a simple way to stay on track with your mortgage. With the right setup and a little planning, it can be a great tool for helping you avoid late fees and credit damage, potentially giving you one less thing to worry about each month. If you’re ready to enroll, log in to your Shellpoint account and get started today.