Interest & Loan Servicing

Interest is simply the "rent" you pay for the privilege of using someone else's money. In a Mortgage, it is usually the largest portion of the monthly payment in the early years of a 30-year loan.The person you sit across from at the bank (the loan officer) is rarely the person who collects your checks for 30 years. A "Loan Servicer" is a company that handles the administrative tasks: collecting payments, sending statements, and managing the escrow account.The Fee: Servicers take a tiny slice of the interest rate as a fee for this administrative work.