When you apply for a home mortgage, you may think that the lender will hold and service your loan until you pay it off or you sell your house. That's often not the case. In today's market, loans and the rights to service them often are bought and sold. A mortgage servicer is responsible for collecting your monthly loan payments and crediting your account. A servicer also handles your escrow account, if you have one. If your loan is about to be sold, you generally get two notices: one from your current mortgage servicer; the other from the new servicer.

Usually, your current servicer must notify you at least 15 days before the effective date of the transfer, unless you received a written transfer notice at settlement. The effective date is when the first mortgage payment is due at the new servicer's address. The new servicer must notify you within 15 days after the transfer has occurred. Prepayment rules for individual loans and specific lenders vary. For details, contact your lender, ask how your loan can be prepaid, and get answers in writing. Some lenders have monthly forms which automatically allow for prepayments while others have more exotic and complex prepayment programs.

Whatever the lender's preferences, always track your loan with care to assure that all extra payments are fully credited to principal reductions. In the case of a curtailment, before making a lump-sum payment obtain instructions in writing from the lender. If big money is involved, or if the loan is being paid off, get assistance from a real estate attorney. You can also use a amortization calculator to generate an amortization schedule (by month or by year) as well the monthly payment for a mortgage paid either monthly or bi-weekly. It can also demonstrate the effects of prepaying your mortgage on an irregular (one-time) or regular (monthly or annual) basis.