What makes up a mortgage payment?
Your mortgage is likely one of the largest bills you pay or will be paying when it comes to your monthly expenses so it would only make sense to know what makes up that mortgage payment. As we review this, please keep in mind that everyone’s circumstances are different and the example we are going to look at is only to serve as an example and not necessarily the way your specific mortgage payment breaks down. That is why you get to work with a specific loan officer who can help answer questions that are specific to your circumstances. I digress. Let’s look at an example of a mortgage payment breakdown.
The basic components of a mortgage payment are principal, interest, taxes and insurance. The principle is the amount of money that is going to that sales price of your home, so it is chipping away at the amount you owe on the home. The interest is the amount that is charged in addition to the principal, it is what the lender charges for lending you the money. Taxes are, property taxes, specifically. Taxes are due annually but to lessen the burden, the anticipated annual amount is divided by 12 to determine the monthly amount you will pay. Lastly, we have insurance; this is your monthly homeowner’s insurance cost and may contain mortgage insurance, depending on the conditions of your loan.
In an article put out by Better Money Habits they gave the following example breakdown of a mortgage payment:
30 Year Fixed Mortgage at 4.54% APR
Home Price $250,000
20% Down Payment= $50,000
Loan Amount $200,000
Monthly Payment $1,335.00
The following make up that monthly payment listed above:
Do you have some questions about what your monthly payment would look like? Give us, at Stockton Mortgage Corporation, a call! With our 99% customer satisfaction rating you can count on us to guide you in the right direction! Stockton Mortgage Corporation 1-888-914-2276