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What Exactly Does Your Mortgage Payment Cover?

What Exactly Does Your Mortgage Payment Cover?


What Exactly Does Your Mortgage Payment Cover?

If you’ve been renting for a long time, you’re probably used to a single monthly payment for your housing needs. For some people, your rent payment covers a range of things from housing, power and heat to parking, sewer and water. But when you own a house, your monthly payments are going to be a little more complicated. Adding to the complexity is the fact that the actual mortgage payment on your home isn’t the same for everyone.

What’s in a Mortgage Payment?

Most mortgage payments are PITI payments: principle, interest, taxes, and insurance. That includes the loan from the bank, plus property taxes and insurance. There’s a reason for this. Banks want to make sure you pay your property taxes and insurance because they don’t want you to get your home taken away and want to ensure you (and they) have coverage if something were to damage your home.

  • Principle. This is the amount that you initially borrowed. Mortgages in the United States are “front-loaded,” which means you’re paying more interest and less principal at the very beginning. As you get to the end of the loan term, you’ll be paying less in interest and more in principle.
  • Interest. This is the amount that your mortgage company is charging you for the loan. When you initially get your mortgage, you can usually pay for “points” against your interest, lowering your interest rate for a flat-rate cost.
  • Taxes. Every home is associated with property taxes. Lenders may hold this amount in escrow and pay taxes on your behalf because they want to ensure that it’s paid. Your property taxes are based on the assessed value of your property, and you may be able to get an exemption for some of the amount if you are a resident of the property.
  • Insurance. Lenders require you to have homeowners insurance, so you’re protected from damage and peril. Like taxes, this is held in an escrow account and often paid on an annual basis. Insurance can include two different types: property insurance and mortgage insurance. Property insurance is the regular homeowners insurance that people need to pay to protect their homes from disaster. Mortgage insurance is also known as PMI: You often have to pay PMI if you’re paying less than 20 percent down.

It should be noted that not all lenders collect property taxes and homeowners insurance from you. Some banks only collect principle and interest and understanding what your monthly mortgage payment includes is important so that you can realize your other payment obligations as well.

Understanding your monthly housing costs is critical to understanding how much you can afford. Your lender will take all of your debt and income into consideration to determine our debt-to-income ratio before your loan is approved. It is important to consider all of the payments you’re going to need to make in a month, which often go beyond just your mortgage principal and interest.

The first step toward getting a mortgage is taking part in the preapproval process. Are you ready for home ownership? Is it time to explore the idea of getting a mortgage?

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Mortgage Investors Group, based in Tennessee, offers residential financing in a number of states in the southeast, See MIG Service Areas. Terms and conditions to apply to home financing. We want to share with you the loan terms vary based on several characteristics and your financial profile. These include but are not limited to loan program, loan purpose, occupancy, credit history, credit score, assets, and other criteria per loan type. The repayment terms and interest rate may vary from time to time. The terms represented here are based on certain assumptions outlined below and/or noted on the loan outline page. Additional details concerning privacy, program disclosures, licensing specifics may be found at migonline.com Legal Information.

MIG Loan Officers will help gather the information needed for an individual assessment to provide home financing which matches the loan characteristics with your home financing needs based on your financial profile, when you are ready to begin a full loan application. For estimates and general information before that step, the basis for which the mortgage financing information are as follows:

  • Rates are subject to change at any time.
  • Rate locks are available at current terms for 30 to 180 days based on program type, credit profile, property location, etc. which will affect the available rate and term.
  • Rate locks are available at current terms for 30 to 180 days based on program type, credit profile, property location, etc. which will affect the available rate and term.
  • Payments will vary based on program selection, current rates, property location, etc.
  • Not all programs are available in all states.
  • Some loan programs may not be available to first time home buyers.
  • Terms and conditions apply, which may include restrictions or limits per loan program.
  • Information is generally based on primary residence occupancy with no cash out when refinancing.
  • Unless otherwise stated, terms shown are estimates based in part on credit score of 700 or higher; owner occupancy, escrow account is established for taxes and insurance(s); debt-to-income ratio no higher than 43.0%; PMI applies to conventional loan programs over 80.0% LTV; VA,FHA & RD require insuring fees included in loan and/or payment; fixed rate, 30 year term.

An MIG Loan Officer is available to help with your financial details to determine which characteristics apply to your situation for a personalized look into which loan program best fits your home financing needs. Please use the Find a Loan Officer link or reach out to Mortgage Investors Group at 800-489-8910. Equal Housing Lender 1.2020