Have you always wondered about the costs that make up a mortgage payment? This article helps break down the average monthly mortgage payment; this information can be helpful in determining how much house you can afford or how much of a down payment you should try to come up with.
Part of your mortgage payment will go towards the principal, which is the actual sale price of the home, minus any fees or additional charges. With each mortgage payment, the amount that goes towards your principal brings you a little closer to officially owning your home.
As with any other loan, each monthly payment also includes interest fees. Your interest rate will be based on a variety of factors, such as your credit score, down payment amount, whether you purchased points, and so on.
There are two types of insurance fees that may be part of a monthly a mortgage payment. The first type is Private Mortgage Insurance (PMI). This insurance is required for borrowers who put less than 20 percent down when purchasing their home. PMI protects the lender in the event that the borrower falls behind on the mortgage insurance. The other type is property insurance, which protects your property and its contents in the event of a disaster, such as a weather-related incidents, fire, etc.
Property taxes are assessed by governmental agencies. They’re calculated on an annual basis, but homeowners have the option to pay these taxes as part of their monthly mortgage payments. The lender collects this portion of the payment each month and keeps it in escrow until tax season rolls around.
If you need cash now to purchase a home and you’re receiving structured settlement payments, contact us today. At Peachtree Financial Solutions, we can purchase some or all of your future payments and provide you with the lump sum payout you need to buy your dream home. The money you receive can be used towards your down payment. Contact us today for more information and to get started!
Nothing above is meant to provide financial or tax advice. You should meet with appropriate professionals for such services.