So, what exactly is included in your monthly mortgage payment?
PRINCIPAL
This is the total amount of the loan given. For Example, if you take out a $300,000 mortgage to purchase a home, then the principal loan amount is $300,000.
INTEREST
This is the monthly percentage added to each mortgage payment. Lenders + banks don't simply loan individuals money without expecting to get something in return. Interest is the money the bank earns or charges on the money you borrowed.
PRIVATE MORTGAGE INSURANCE
This is required for borrowers that make a down payment of less than 20%. This insurance is designed to protect the bank/lender if the borrower defaults on the loan.
TAXES
The municipal taxes are calculated based on the value of the home.
INSURANCE
This is required by lenders to cover damage to the home, as well as the property inside of it.
If you have questions about financing to purchase a home, I have several great Mortgage Lenders I can pair you up with!
