Wondering why we have an entire section on mortgage payments?
Because it is that important.
When you buy a house and get a mortgage, your payment is going to be what you live with every month. It is what you budget for and what you plan on.
Mortgage Payment Basics:
In the event that after you close your loan and don’t get a coupon from your lender, you can look back at the documents you signed and there should be a temporary coupon in there.
Generally speaking, your mortgage payment is generally due at the beginning of the month, and most lenders start assessing late fees on the 15th. It is extremely important to remain under 30 days late on a mortgage payment, especially within the first 8-12 months of closing on a new loan.
When you receive your first mortgage bill, there will be a few numbers that add up to your total payment:
This is the portion that goes towards paying down your balance. An Amortization Schedule will break down the exact amount of each payment that is being applied to the principal and interest.
The interest payment is essentially the amount you’re paying the bank over time to borrow the principal balance.
Real Estate Taxes can either be included (Impounded) in your monthly payment (PITI), or paid by the homeowner separately.
Certain government loan programs or high Loan-to-Value (LTV) mortgages require that taxes and insurance be included with the total mortgage payment.
Either way, it’s important to make sure you ask your loan officer and/or closing agent during the final loan docs signing to clearly explain what’s included in your monthly mortgage payment.
This is your hazard insurance (Fire), which protects your home and belongings. While there are many ways to save money on your property insurance, it’s important to know and trust your insurance agent so that you can be fully aware of what’s covered in your policy. Some homeowners shopping strictly on price may unknowingly leave valuable personal items without protection just to save an extra $15-$19 a month.
Mortgage insurance is in addition to hazard insurance, and completely unrelated. A lender will require a borrower to pay mortgage insurance on a property with a Loan-to-Value greater than 80%. The main purpose of mortgage insurance is to protect from foreclosure losses if the borrower fails to meet the monthly payment obligations.
FHA has mandatory Mortgage Insurance, but in a different form.
VA loans have a separate Funding Fee to help protect their interests.
Related Articles – Mortgage Payments:
- Who Owns My Home If I Have A Mortgage?
- How Do I Calculate My Mortgage Payment Without A Calculator?
- Why Do I Need Mortgage Insurance?
- Understanding An Amortization Schedule
- Shopping For A Hazard Insurance Policy
- Understanding the FHA Mortgage Insurance Premium (MIP)
- Do I Have To Continue Making My Mortgage Payment If My Lender Goes Bankrupt?