What’s in a Mortgage Payment?
“What all is included in my mortgage payment?”
All home buyers find themselves asking this million dollar question as they prepare to purchase their new home. There are many factors that make up the payment homeowners see each month. The two largest components of the monthly mortgage payment include the principal payment and the monthly interest charge. The rest of the payment is comprised of real estate property tax and homeowners insurance. Many buyers are required to carry homeowners insurance by the lender. This type of coverage protects you from disasters such as fire, lightning, hail, frozen pipes and theft.
Considering these variables, many people then wonder if their mortgage payment will ever change. By selecting a fixed rate mortgage, you can ensure your principle and interest payments will remain the same for the life of the loan. Property tax and homeowners insurance can vary year to year, however. Each year, the lender will value the mortgage’s escrow account. The balance of this account will vary from year to year due to tax assessments and insurance premium adjustments. Upon valuation, your monthly payment will be adjusted upwards or downwards, accordingly.
It can be hard to determine exactly what your mortgage will be for the life of the payment, but using this information can help you get a better idea of approximately where it will be. To learn more about mortgage payments and their components, contact us at 404-574-2600, or visit our website at www.academymortgage.com today!
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