Entry

What's in a mortgage payment?

Sep 24th, 2007 03:24
Jemmy wilson, grant chen, http://www.keytomortgage.com, http://www.nsrfinance.co.uk

Mortgage payments consist of costs for principal, interest, property 
tax, hazard insurance, and mortgage insurance.
Principal 
The principal is the amount of money you borrowed. Each month when you 
make your mortgage payment, you are paying back a small portion of the 
principal. The longer the payments are amortized (over 30 years for 
example), the more the payments go to reduce the principal you owe; 
over time, interest will become a smaller part of your monthly payment. 
In the beginning, most of the mortgage payments made to the lender will 
be interest payments.
Interest 
Interest is the cost of borrowing money, usually expressed as an annual 
percentage of the loan amount - for example 8.125%, 9.000%, etc. 
Lenders will offer different rates depending on the type of loan 
program offered. 
Property Taxes 
These are taxes paid to local governments, usually charged as a 
percentage of the property value. Your lender collects the taxes 
through your monthly payments. The amount of tax will vary depending on 
the location of the home. 
Hazard Insurance 
This is a contract that protects you from any financial losses on your 
property that might result from fire, flood, or any other "hazards." 
Mortgage Insurance 
This is an insurance policy that pays mortgage lenders for part of 
their financial losses if a borrower fails to fully repay a loan. 
Mortgage insurance makes it possible to buy a home with a low down 
payment.
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The Independent Mortgage Specialist
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Read More at http://www.nsrfinance.co.uk 
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