Easy steps to understanding your mortgage payment breakdown.

[Jasz]

If you’re ready to buy a home, it’s time to pay attention to your mortgage payment.

No matter how much you think of yourself as a smart consumer, there are some things you may not know about paying off your mortgage.

Step 1: Know your interest rate: This is the amount of money you pay for each dollar borrowed. The longer you keep up with payments, the lower your interest rate will be.

Step 2: Know how much your monthly payment will be: To calculate this amount, multiply the loan amount by the interest rate and divide by 360 (months), then add any additional fees like taxes and insurance. If you’re paying more than 20 percent of your gross income on housing costs, consider refinancing with a lower interest rate.

Step 3: See what kind of fees might be added to that monthly bill: Fees can include escrow accounts for property taxes, homeowners insurance and utilities; mortgage insurance; closing costs; real estate taxes and assessments; maintenance fees; late fees if you miss a payment; payoff amounts (principal or interest); and other charges that come as part of owning a home. Some fees may be waived.

 

[Holicent]

Your mortgage payment breakdown helps you understand how much money you pay each month for your mortgage and interest. It's a great way to see where your money goes, which can help you budget better so you don't have to worry about overspending or going into debt.

Here are five easy steps to understanding your mortgage payment breakdown.

1. Get a copy of your mortgage statement.

2. Find the total amount of the loan payment and monthly principal amount on the statement.

3. Divide that number by 12 to find out how much of a percentage of your income goes toward paying back the loan each month, including taxes and insurance premium payments, plus any other costs associated with owning a home (property taxes, homeowners insurance).

4. Multiply that percentage by 12 to get an estimate of what portion of your income goes toward paying back your mortgage each month, including taxes and insurance premium payments, plus any other costs associated with owning a home (property taxes, homeowners insurance).