Do you have enough money in your bank account to cover your upcoming mortgage payment? If the answer is “no” (or “I don’t know”) and you attempt to make a payment from your account without sufficient funds, you will be hit with a non-sufficient funds (NSF) fee. Read on to find out how to avoid this fee.
What are NSF Fees?
Whether you’re paying your mortgage by check, online or by autodraft, if the amount of your payment exceeds the balance in your bank account, your bank will reject the payment (in other words, your check “bounces”).
For example: If the amount of your monthly mortgage payment is $1,000, and you have $500 in your checking account, the payment will not go through. When that happens, your bill is still unpaid, and an NSF fee is charged to cover the time and money it costs us to process the invalid payment.
The most we ever charge for an NSF fee is $50, and your fee could be less depending on state law. Your bank might also charge you a separate fee unless you have overdraft protection.
Obviously, it’s frustrating to be charged a fee when you don’t have enough funds to cover your mortgage payment to begin with. But beyond that, incurring outstanding fees can hurt your credit score. Late payments on your mortgage can also negatively impact your credit score.
Why did I get an NSF fee?
It is always a good idea to monitor your checking account balance to ensure you have enough financial “cushion” to cover upcoming bills. Other reasons you might have been hit with an NSF fee are:
· Postal delays. Checks take days—sometimes even weeks—to reach their destination via mail, and delays are not uncommon. When delays occur, it can be challenging to time your payments to when your account balance is high enough, unless you maintain a financial cushion.
· Unforeseen factors. Perhaps your paycheck didn’t clear on time, or a large purchase you made several days ago just now hit your account.
· Incorrect account numbers. Always make sure you enter your routing number and account number correctly when setting up autodraft with us, or when making payments through our automated phone system. It’s fairly common for wrong account numbers to result in fees, since the payment request isn’t going to the right place.
· Incorrect checks. Your payment will also be rejected if a check is written from a closed account, or if you fail to properly endorse the check.
A consistently insufficient bank account balance might be a sign that you are in a difficult financial situation. If you are a Newrez customer and you are unable to make your payments, reach out to us online and we can discuss your options, including potential alternative payment plans. Log in to your online account, click “account details” and then click “chat online” to talk with one of our team members. Be sure to have your loan number handy.
How can I avoid NSF fees?
· Monitor your account. The best way to avoid NSF fees is to regularly look at your account balance. Sometimes bills or purchases impact your account balance at unexpected times. Maintaining a cushion amount of money in your account can help serve as a safety net for when costs sneak up on you.
· Double check that your bank account and routing numbers are correct. This applies if you signed up for autodraft online or if you make payments through our automated phone system. Be sure to listen carefully to the playback to ensure the numbers are accurate.
· Create a budget and stick to it. Build a spending plan to ensure you have enough money to cover your bills each month. If you’re struggling to make your mortgage payments, review your spending habits to see if you have any regular expenses that can be reduced or eliminated. Paying your bills, including your monthly mortgage, should be your top priority.
· Talk to your bank. Banks typically offer a variety of ways to help you avoid NSF fees. You might be able to link multiple accounts to cover shortages, or you can sign up for overdraft protection. If you find that your bank charges too many fees, consider looking for a new bank.
· Set up account alerts. Email or text alerts can make it much simpler to monitor your account balance.
· Plan around payday. Schedule your mortgage payment to be withdrawn a day or two after your regular payday. That way, you’re much more likely to have enough money in your account when you are charged.
No one wants to pay extra fees. Instead, paying a little extra attention to your money can help keep it in your pocket.