Five easy steps to understanding your mortgage payment breakdown

King bell

VIP Contributor
When it comes to understanding your mortgage payment, there can be a lot of confusing jargon and numbers involved. But it doesn't have to be complicated- here are five easy steps to understanding your mortgage payment breakdown.


Your mortgage payment is made up of several different parts, including the principal (the amount you borrowed), interest, taxes, and insurance. Breaking down each of these components can help you better understand how your mortgage works, and how much of your payment goes towards each area.

Principal:

The principal is the amount you originally borrowed from your lender. Each mortgage payment you make will include a portion of the principal, which is paid off over the life of your loan.

Interest:

Interest is the fee charged by your lender for borrowing the money to finance your home. Your interest rate will determine how much interest you'll pay over the life of your loan.

Taxes:

Your property taxes are also included in your mortgage payment. Property taxes are calculated based on the value of your home and are typically paid to your local government.

Insurance:

Most lenders require that you have homeowners insurance, and your premium will be included in your mortgage payment. Homeowners insurance protects your home in case of damage or other loss.

By understanding the different components of your mortgage payment, you can get a better sense of how your money is being used. And if you have any questions, be sure to ask your lender for more information.
 

bongoly

New member
It is quite some steps to go through, There is a lot of information on your repayment from your amortization schedule.
 

Holicent

VIP Contributor
It's important to understand the different parts of your mortgage payment. Understanding how much of each part is going to be paid by you will help you budget for the future and make sure that you're not overpaying for things like property taxes or insurance.

1. Find out what's covered in your loan

The first step is understanding what's actually included in your loan payment. This can vary from lender to lender, but here are some common components:

Cash-out refinance: The amount paid out as a cash-out refinance is typically 10% to 20% of the total loan amount. This may be paid annually or semi-annually, depending on the terms of your new loan agreement.

Property taxes and insurance: These are typically included in your monthly mortgage payment as an itemized deduction. If you have other payments that are already deductible, such as utilities and maintenance fees, they might also be tax-deductible under special circumstances.

Mortgage interest: This is usually split between principal and interest payments on your mortgage balance each month (though it can be split between principal and interest if you're making extra payments).
 
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