Your monthly mortgage payment is based on a lot of different factors. Some of these things include the cost of the home, how much you’re borrowing, how big your down payment is, the terms of your mortgage (including your interest rate), and the county you’re buying a home in. Understanding the different fees that make up a monthly mortgage payment can be very helpful during the house hunting process, as it can give you a clearer picture as to how much home you can afford and how much of a down payment you need. Monthly mortgage payments are comprised of the following:
Just like any other loan, all monthly payments will include finance charges. Interest rates are based on many different things, including your down payment amount, credit score, whether you locked in your rate ahead of time, and the current average mortgage rate at the time of closing. Your interest rate may be the same over the course of your home loan if you chose a fixed-rate mortgage. If you’re financing your home with an adjustable rate mortgage, then your interest rate and payments will fluctuate. Many homeowners with less than favorable mortgage rates will eventually refinance their home loans years later, in hopes of lowering their monthly payments.
Part of your monthly payment will go towards your home’s principal. As the years go by and you pay more into your principal, you gain more equity in your home and get closer to owning it free and clear.
There’s no escaping property tax, but the rate can vary widely depending on what county you purchase your home in. As such, you’ll want to research various counties’ property taxes in your city when you’re house hunting. The same home in a neighboring county can cost hundreds of dollars more each month just based on the property tax rate alone. Although these taxes are paid yearly, many lenders require that borrowers make monthly payments, and these taxes are rolled into the mortgage payments.
Homeowners’ insurance is also normally included in a monthly mortgage payment, and is required by lenders since they still technically own the property while you’re making mortgage payments. This type of insurance protects your home in the event of a catastrophe, such as fire, weather-related disasters, and so on. And if your down payment was less than 20 percent of the home’s sale price, you’ll also be required to pay Private Mortgage Insurance (PMI) until you do pay into 20 percent of the home’s principal. PMI is also rolled into your monthly mortgage payments.
Buying a home can be difficult without the extra cash for a down payment or closing costs, but if you’re receiving structured settlement or annuity payments, Peachtree Financial solutions may be able to help. Instead of receiving your money periodically, you may be able to receive it in one lump sum by selling future payments to Peachtree Financial Solutions. Depending on how much money you need and the details of your payment stream, you may be able to get what you need by selling just a portion of your future payments, while keeping the remainder of your payment stream intact. Contact Peachtree Financial Solutions today to learn more about selling future payments for a lump sum of cash.
Nothing above is meant to provide financial, tax, or legal advice. You should meet with appropriate professionals for such services.