For most homeowners, the monthly mortgage payments include four separate parts:
• Principal: Repayment on the amount borrowed
• Interest: Payment to the lender for the amount borrowed
• Taxes & Insurance: Monthly payments are normally made into a special escrow account for items like hazard insurance and property taxes. This feature is sometimes optional, in which case the fees will be paid by you directly to the County Tax Assessor and property insurance company.
Mortgage Insurance: In a purchase transaction if you are putting down less than 20% you will most likely have to pay a small monthly mortgage insurance premium. In a refinance transaction if your loan amount is above 80% of the value of your property you will most likely have to pay mortgage insurance too. There are certain instances where you can avoid paying monthly mortgage insurance even when you are putting less than 20% down or refinancing with a loan amount above 80% of the value. Please contact us for more information regarding your particular situation.