My name is Rebecca Richardson. I am a senior mortgage consultant with Windham capital. And one question that clients ask is what goes into my mortgage payment.
The thing that I think is important to understand is your mortgage payment is often more than just the principal and interest. Mortgage payments can also be described as P I T. That's principal, interest, taxes and insurance. The principal and interest are going to be paying down the loan balance based on the terms of your mortgage. How long is the mortgage? is it a 15 years or 30 years mortgage, and also your interest rate, the taxes are going to be property taxes. Those are property taxes charged by the city and county, the insurance portion is going to be mortgage insurance if the loan type requires it. Or if you have less than a 20% down payment. There is also homeowners insurance. Homeowners insurance is going to protect you and the lender in case there's any kind of damage to the property.
Lastly, if you live in an area that requires flood insurance, or any other type of specialty insurance, that's also going to be included in your payment. If you do have taxes and insurance included in your payment or escrowed. Let's say that your tax bill is $2000 a year, $200 of your monthly payment will be set aside in an escrow account to pay that tax bill when it comes. If your taxes go up to $3,000 a year, that is going to increase the amount that needs to be collected as those amounts fluctuate well, your mortgage payment, the principal and interest portion does not change as long as you have a fixed rate. That will always stay steady. That's why you want to make sure that if you do have payments set up on an auto pay, (which is a great option because that way you make sure that everything gets paid on time) you always still want to make sure that you're paying attention to your mortgage statements in case that escrow analysis shows that more is needed.
That way you can adjust your payment to make sure that the right amount is being sent to your mortgage company. Keep in mind that everything extra that you pay, even if it's a few dollars, it does go to the principle of your balance and every little bit helps because as you pay that balance down, less interest is charged.
Do you ever have questions about your mortgage payment or maybe even ways to make it more efficient, make it work for you? Please give me a call. I'm here to help.