What’s in a Monthly Mortgage Payment?
Many of us make them but do we know exactly what our monthly mortgage payments are made up of. Whether you get your loan from an Edmonton mortgage broker or the bank itself, it’s a good idea to know where you’re money is going. So where exactly do all those numbers come from? How much of my monthly payment goes to my principle, are there taxes in my month’y payments? Here we’ll answer those questions with the PITI acronym.
The principal is the amount of money that you borrowed from a lender minus your original down payment. This is the amount that your interest is calculated on.
Interest is the money the lender charges you for lending you money – think of it as a few. Interest is a percentage based off the total amount of money you owe. The lower the principle the lower your interest portion of your monthly mortgage payments will be
We all hate them, but we all have to pay them. Money you pay your propriety taxes is often put into an escrow account, which is usually a third party entity that holds all the accumulated property taxes until they’re due at the end of the fiscal year.
Most mortgages require the purchase of hazard insurance to help protect against losses from fire, weather, theft, floods and any other potential catastrophes. If your down payment is less than 20% or the equity you own in your home is less than 20% you may also have to find some private mortgage insurance which helps protect the lend incase of default.
Well. There you have it the basic components of a monthly mortgage payment. Whether you choose to go straight to the bank or leverage your position a little better with an Edmonton mortgage broker these 4 parts will usually make up your monthly mortgage payments. All this seem a little confusing we can help