Your Mortgage Payment
The amount of money borrowed. Each month when a mortgage payment is made, a small portion of the principal is being paid back. Over the life of the loan, the portion going to principal will increase and the portion going towards interest will decrease.
The cost of borrowing the principal.
Taxes are paid to local governments. Lenders collect taxes through monthly payments that they then use to pay the property taxes when they are due.
All lenders require that borrowers have hazard insurance (Home Owners Insurance) which protects the borrower against any financial losses that might result due to a fire, flood or other “hazard.” The hazard insurance policy must be paid in full for one year at the time of closing.
An insurance policy that pays mortgage lenders for their financial losses if a borrower fails to repay a loan. Mortgage insurance makes it possible to buy a home with a down payment of less than 20%.
Condominiums and townhomes charge assessments for the general upkeep of the common areas of the building as well as amenities associated with the condominium. The borrower is required to pay the association directly. The association dues are not part of the mortgage payment to the lender.