Mortgage interest paid dropped $5k in a year - should I be worried about my 1098s?

Thanks for the explanation. I'm still confused though because we're only in year 3 of our mortgage, so wouldn't the interest portion still be relatively high? And would it really drop that much in just one year? Our mortgage payment is around $3,800 a month if that helps.

You're right to question the size of the drop, especially early in your mortgage. While the interest portion does decrease every year, a $5k drop does seem substantial for just being in year 3. With a $3,800 monthly payment, we'd need to know your interest rate and total loan amount to determine if this decrease makes sense. Even in the early years, the principal portion increases faster than you might think. However, it would be worth checking if all 12 months were accounted for on each 1098. Sometimes when loans transfer, there can be reporting gaps or overlaps that need to be reconciled.

How exactly does this work? I'm in a similar situation but with 3 different mortgage companies last year (refinanced, then that company sold it, then THAT company sold it). I have a stack of statements but I'm not even sure if I have all of them.

Sounds too good to be true. Wouldn't I need to gather all my paperwork perfectly first? My documents are a mess and I'm missing statements from when the loan transferred.

It works by scanning and analyzing all the mortgage documents you have - statements, 1098 forms, loan transfer notices, etc. The AI identifies payment patterns and can often spot gaps even if you're missing some statements. It creates a timeline showing exactly what you paid when, and compares that against what each servicer reported. You don't need perfectly organized paperwork - that's actually the whole point. The system is designed to make sense of messy situations with multiple servicers. It can work with incomplete records by analyzing the documents you do have, identifying patterns, and highlighting where the reporting gaps likely occurred. Then it creates a report showing what your actual mortgage interest paid should be based on the available evidence.

Wait, how does this actually work? Do they somehow hack the IRS phone system or something? I've been trying to talk to someone for weeks about my mortgage interest deduction issue.

Yeah right. Nobody gets through to the IRS. I've been trying since January to talk to someone about my mortgage interest deduction issue. This sounds like another scam service that promises impossible results.

It's completely legitimate - no hacking involved. They use an automated system that dials into the IRS call center, navigates through all the prompts, and waits on hold for you. The technology basically holds your place in line. Once an actual human IRS agent picks up, their system calls you and connects you directly to that agent. I had the exact same reaction at first. I've spent countless hours trying to get through to the IRS about my mortgage interest issue. With this service, I put in my number, selected the IRS department I needed (tax filing questions), and went about my day. About 3 hours later, I got a call saying an agent was on the line. It was actually pretty amazing to talk to a real person without spending my entire day on hold.

They absolutely cannot change your interest rate when selling your loan unless you have an adjustable rate mortgage (ARM) that was scheduled to adjust anyway. Check your original loan documents - the rate should be fixed for the term you agreed to unless it's specifically an ARM product. If they did change it without proper cause, that's illegal and you should file a complaint with the Consumer Financial Protection Bureau immediately. A 0.125% rate hike might seem small but adds up to thousands over the life of your loan.

Thanks for confirming what I suspected. I just pulled out my original closing documents and you're right - I have a fixed 30-year at 4.125%. Going to call the new servicer tomorrow and ask them to explain the discrepancy. Do you think this could explain why my interest paid dropped so much year over year? Or is that likely a separate issue?

This could definitely contribute to the interest discrepancy, but in the opposite direction - a higher interest rate should result in MORE interest paid, not less. So unfortunately, this indicates there might be multiple issues to resolve. I'd recommend gathering all your statements from both years to verify if all 12 months are accounted for on the 1098s. Sometimes when loans transfer, a month or two can fall through the cracks in reporting. Also check if you made any extra principal payments last year that you didn't make the year before, as those would reduce your interest paid.

This is a really good point. I once made a single extra principal payment of $10k and was shocked at how much it reduced my yearly interest. Also, if your mortgage has an escrow account for taxes and insurance, changes to those amounts wouldn't affect the interest portion but could make your total payment seem consistent even while the interest/principal ratio was changing.

We actually did make a couple of extra payments last year - put our tax refund toward the mortgage and then got a small bonus in October that we threw at it too. Never connected that this would significantly change the interest calculation. Between the loan sales and the extra payments, I'm starting to think this drop might be legitimate after all. Going to double-check all our statements though just to be safe.

This happened to me too! The new servicer somehow "lost" my payment allocation instructions and reverted to their default distribution. I only caught it because I was tracking everything in a spreadsheet. Definitely go through each statement carefully.

Is there an easy way to verify this? I have all my statements but honestly have no idea what I'm looking for in terms of payment allocation. What specific numbers should I be comparing month to month?