Your Mortgage Payment

 
Principal

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.

Interest

The cost of borrowing the principal.

Property Taxes

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.

Hazard Insurance

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.

Mortgage Insurance

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%.

Assessments

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.