U.S. Mortgage Index

Automatic payment

Definition

An automatic payment is a recurring mortgage payment the borrower arranges to be taken from a bank account. It is a payment method, not the monthly payment amount itself.

In plain English

Many borrowers ask the bank or servicer to send the mortgage payment on a schedule so a due date is less likely to be missed. That arrangement is an automatic payment. The monthly payment is the amount due. Automatic payment is only how that amount is sent.

Technical definition

CFPB’s mortgage key-terms page defines automatic payments as recurring mortgage payments set up through a bank. That official consumer heading is PRIMARY.

Why it matters

Servicing transfers and missed-payment questions often mix the amount due with the payment method. The two stay separate.

Example

A borrower can keep the same monthly payment and still change whether that payment is sent automatically or by hand.

Sources reviewed