What is included in my monthly mortgage payment ?

The Principal
  • The amount of money borrowed to buy your house or the amount of the loan that has not yet been repaid to the lender.
  • This does NOT include the interest that you will pay as a cost for borrowing the money.
  • The principal balance can also be referred to as “the outstanding balance” or “unpaid principal balance.”
  • The portion of your payment that reduces your loan balance with each payment paid.
Interest
  • The portion of your monthly payment that the lender charges to borrow the money used to purchase your home.
  • It is often expressed as a percentage of the amount borrowed.
Taxes & Insurance
  • Monthly payments are made into a special account required by lenders, also known as an escrow account.
  • This special escrow account account includes housing expense items such as property taxes, and annual recurring costs like hazard insurance.
  • It is very rare that a lender does NOT require an escrow account to be established; however, this feature can be waived on conventional or jumbo loans where certain loan guidelines are met. ( I.E: When you put 20% down as a down payment)
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