Information for First-Time Home Buyers
When you’re thinking of buying a home, you may wonder what your mortgage payment will look like. When you have a mortgage, you’ll have several different portions of your payment each month.
Your mortgage payment consists of principal, interest, taxes and insurance (often referred to as P.I.T.I), and sometimes additional fees, such as homeowners association dues.
Principal is the money you borrowed to purchase the home.
Interest is the cost of borrowing money.
Taxes are paid by homeowners to local governments, and are usually a percentage of the assessed property value.
Insurance helps protect against financial loss from fire, natural disasters or other hazards. Most lenders require you to have a homeowner’s insurance policy on your home because it will help protect their investment as well as yours.
Remember, many loan quotes will only include your principal and interest. You’ll also need to factor in the taxes and insurance to calculate your total monthly mortgage payment.