MORTGAGE 101
What Is Included In A Mortgage Payment?
Welcome to Mortgage 101. We help home buyers and realtors understand home loans. You’re in the right place if you’re thinking of buying your first home, if you’re moving to your next home, or if you’re ready to refinance your existing loan.
What Is Included?
Your monthly mortgage payment includes funds for principle and interest of your loan, taxes and insurance. This is only if you are escrowing.
If you have mortgage insurance on your loan, that will also be included in the monthly mortgage payment.
What Is Escrowing?
About 90% of borrowers will use escrow for taxes and insurance. The lender pays the tax and insurance bills when they become due.
According to zillow.com, Escrow is funds held by the lender to make payments for your homeowners insurance and property taxes. Lenders will collect them monthly along with your loan payment and then pay the tax and insurance bills when they are due. That’s because your lender has a vested interest in making sure those payments are made.
However, some people choose to pay those outside of their mortgage. Either option is fine.
What Is NOT Included?
Not all your home bills are included in your monthly mortgage payment. For example, your Home Owners Association (HOA) or condo fee is NOT included in the payment. The lender does not make those payments for you and they are not included in the calculation for your mortgage payment.
Instead, you will pay the HOA and condo fees separately to the community management company.