Monthly Mortgage Payment Facts

Monthly Mortgage Payment Facts

There are four parts to monthly mortgage payments. Also known as "PITI," your monthly check is divided between Principal, Interest, Taxes, and Insurance.

• The monthly mortgage payment of principal applies directly towards repaying the loan.
• The monthly mortgage payment of interest pays the interest that has accumulated against your loan.
• Taxes and insurance are put into an escrow account to cover these costs as they are due.

Remember that on an interest-only loan, you are paying only the interest and are not making payments against the principal. As a result, you're not building equity (increasing your percentage of ownership of your home) with your monthly payment.

Watch out for negative amortization, payment caps that deplete your equity each month, found in some adjustable rate mortgages. Negative amortization is when your principal balance is growing instead of shrinking.

• When interest rates go up on an adjustable rate mortgage, and you make the minimum monthly mortgage payment, negative amortization begins.
• The amount of your mortgage increases if the payment doesn't cover the interest owed, so the unpaid interest is added to your principal balance.

Most home equity and other credit lines have variable interest rates. When interest rates goes up, your monthly mortgage payment increases.

Most loans with variable interest rates feature a low introductory rate, but will change after a stated period of time, such as a year.

Handy New Home Loan Form

To determine how much your monthly mortgage payment would be for a new home loan, check out this short form and multiple lenders will provide you with complete information and rate quotes.

Handy Home Equity Loan Form

If you are looking for a home equity loan, then try this form instead for rate quotes and payment information.

Handy Home Refinance Form

Or, if you are looking to refinance your home, please click here to get rate quotes and information from multiple vendors.