What Will My Payment Be?

Jamie Carmouche October 23, 2014

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If you are looking at buying a new home, one of the first questions that might come up will be about your payment.  Not sure of everything that is included in a mortgage payment?  Below are some things that are generally included.

Principal and Interest.  The two things that will always be built into a mortgage payment will be the principal portion of the payment (which is the amount that actually goes toward paying your loan down) and the interest portion (the amount the mortgage lender charges you for the loan).  When looking at payment amounts, you will need to check out what the current interest rate will be for the loan you are looking at (30 year, 15 year, etc.).

PMI.  Private mortgage insurance, or PMI, is typically required by a lender when your mortgage amount is more than 80% of the value of your home.  For example, if your mortgage amount was $150,000 and the value of the home was $175,000 (85% loan amount to value) you would be required to pay private mortgage insurance.  PMI is typically between .5% and 1% of the loan amount.  So on our example loan, PMI (at 1%) would be as much as $1,500 per year, or about $125 per month.  Check with your lender to verify the amount of PMI you would be required to pay.

Property Taxes.  While you can pay your property taxes annually or twice a year if you prefer, many people have the amounts included in their payment.  It is a way of spreading it out throughout the year and you don’t have to worry about coming up with a large chunk of money to pay the property taxes.

Homeowners Insurance.  As with property taxes, you can also to elect to pay your homeowners insurance as a separate bill, but many people choose to have it included in their mortgage payment.  Like the property taxes, it can be easier to just have it spread throughout the year rather than paying a large sum up front.

Still have questions?  Feel free to contact me at jamiecarmouche@gmail.com or 208.890.1052.

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