When you get a mortgage for your home, your monthly payment includes a few things: the money you borrowed (called the principal), the cost of borrowing that money (interest), property taxes, and insurance. The principal is the amount you still owe on the loan. Interest is what the lender charges you for borrowing that money. Property taxes are the taxes you pay to the local government for owning your home, and insurance is to protect your home against things like damage or accidents.
To figure out your monthly payment, lenders use a formula. They take the total amount you borrowed, add the interest you owe on it, then include the taxes and insurance. This formula calculates a fixed monthly payment you need to make over the loan term, which is usually around 15 to 30 years for home loans. However, this formula assumes that the interest rate stays the same and doesn't consider changes in property taxes or insurance costs that might happen later on.
Your mortgage payment stays the same each month, but it's made up of these different parts: paying back what you borrowed, the cost of borrowing that money, taxes, and insurance. It's important to know that your actual monthly payment might change if your property taxes or insurance costs go up. So, when getting a mortgage, it's wise to consider these factors to budget for your monthly payments properly.
Your mortgage payment stays the same each month, but it's made up of these different parts: paying back what you borrowed, the cost of borrowing that money, taxes, and insurance. It's important to know that your actual monthly payment might change if your property taxes or insurance costs go up. So, when getting a mortgage, it's wise to consider these factors to budget for your monthly payments properly.