If you go on those real estate websites, they very often state what your monthly payment might be. But you need to be careful with this, because the amount that they quote on the website may include principal and interest and may not include the other parts of the payment, like taxes and insurance. When you  get ready to buy a home, the first thing that you should do is get with your mortgage broker and get pre-qualified for a mortgage. After you do this, your mortgage broker can give you a more accurate amount of what your monthly payment might be for a given purchase price with a given down payment.

Let’s look at each portion of the overall loan payment to get a better understanding of what you’re paying each month.

The principal portion of your payment is essentially the amount of debt you are borrowing, which eventually transitions into your ownership in the home as it is paid back, also known as home equity.

The interest portion of your payment is the cost of borrowing that money for the loan, or the expense the bank or mortgage lender charges for taking on the risk.

The tax portion of the payment is paid to the local government based on the assessed property value and tax rate for the area.

Finally, the insurance portion of the payment covers homeowners/hazard insurance, which protects the borrower (and lender) from a number of dangers and provides liability coverage.

* You may also see the acronym “PITIA,” which stands for principal, interest, taxes, insurance, and association dues.  This may apply if there is an HOA that charges due for your property each month.

Does the Mortgage Payment Include Insurance?
Your monthly mortgage payment may include insurance
Including both homeowners insurance and PMI (if applicable)
Assuming your loan is escrowed/impounded (which many are)
Impounds are required on loans with LTVs above 80%
And also on FHA loans, VA loans, and USDA loans

For those with a mortgage impound account (typically required for a high LTV loan over 80%), taxes and insurance are paid monthly as part of the overall mortgage payment.

So you’ll pay the full PITI payment each month, as discussed above.

Instead of paying the mortgage and taxes/insurance separately, you’ll make an installment payment each month that covers all of those items.

Then when taxes/insurance are due, they’ll be paid from those proceeds, which are held in an escrow account.

Ruth Schoenherr is a mortgage broker who will help you find home loans in the Clearwater, Palm Harbor, Largo, Safety Harbor, St Petersburg and Tampa Bay area. For more information, go to her web site at www.ClearwaterMortgageBroker.net or call at 727 447-2418.