What does my monthly mortgage payment include?
The bulk of your monthly mortgage payment goes toward paying off the principal and interest of your loan. In additional, most lenders require that you pay a sufficient amount to cover your local real estate tax. plus your homeowner’s or hazard insurance. This amount is placed in an escrow account, from which your lender then pays your tax and insurance bills as they come due.
For most homeowners, the monthly mortgage payments include three separate parts: a payment on the principal of the loan (that is, the amount borrowed); a payment on the interest; and payments into a special account (called an escrow account) that your lender maintains to pay for things like hazard insurance and property taxes. These elements are called P.I.T.I. (Principal-Interest-Taxes-Insurance).
The bulk of your monthly mortgage payment goes toward paying off the principal and interest of your loan. In addition, most lenders require that you pay a sufficient amount to cover your local real estate tax, plus your homeowner’s or hazard insurance. This amount is placed in an escrow account, from which your lender then pays your tax and insurance bills as they come due. Can I pay off my loan early? If you can afford it, and are interested in the considerable advantages of having more equity and/or owning your home free-and-clear at the earliest possible date, the answer in most cases is yes. Earlier in this section, “How to Pay off a 30-Year Mortgage in 15 Years Without Really Feeling It” — outlines a popular formula for pre-payment. The FHA, VA, and even some states do not allow lenders to charge penalties for paying mortgages early or refinancing. In fact, many lenders now include space on monthly statements for borrowers to itemize an additional principal payment they wish to in
The bulk of your monthly mortgage payment goes toward paying off the principal and interest of your loan. In addition, most lender require that you pay a sufficient amount to cover your local real estate tax, plus your homeowner’s or hazard insurance. This amount is placed in an escrow account, from which your lender then pays your tax and insurance bills as they come due.
And what does PI and PITI stand for? The bulk of your monthly mortgage payment goes toward paying off the principal and interest of your loan. (You may hear lenders refer to this as “PI”, for Principal & Interest). In addition, most lenders require that you pay a sufficient amount to cover your local real estate tax, plus your homeowner’s or hazard insurance. (You may hear this “total” payment referred to as “PITI”, or Principal, Interest, Taxes & Insurance.) This amount is placed in an escrow account, from which your lender then pays your tax and insurance bills as they come due. When shopping for a loan, it is important to ask the lender if the monthly payment you are being quoted is PI or PITI.
