This communication is provided to you for informational purposes only and should not be relied upon by you. Northland Realty is not a mortgage lender. You should contact a lender of your choosing directly to learn more about its mortgage products and your eligibility for such products.
Your monthly mortgage payment is made up of several components. This housing expense is commonly referred to as "PITI" or Principal, Interest, Taxes and Insurance. Private Mortgage Insurance (PMI) and homeowners association dues may also make up a portion of your total payment.
- Principal - The original balance of money loaned excluding interest. It can also be, the remaining balance of a loan excluding interest.
- Interest - The charge for borrowing money.
- Taxes - The county assessor assesses property tax based upon the value of your property. Taxes are due twice a year, May 15th and October 15th. Depending upon the type of mortgage loan you acquire you may pay the taxes yourself on these due dates or your lender may establish an escrow account and they will pay the taxes out of this account on your behalf.
- Hazard Insurance - An insurance policy that protects your interest in the home in the event of a fire, burglary, or other catastrophic events. You obtain homeowner's insurance from an insurance agent. The standard policy pays replacement costs, minus depreciation based on actual cash value. Talk to your insurance agent about the different types of insurance plans and coverage available to you.
- Private Mortgage Insurance (PMI) - Depending on the amount of your down payment, you may be required to pay for private mortgage insurance. Typically anything less than 20% down requires PMI. Because loans with small down payments involve substantially more risk for the lender, they need protection in case the loan goes into foreclosure. Mortgage Insurance helps cover the lender's loss, in the event of foreclosure. Because this insurance is available, lenders can offer loans with lower down payments.
PMI requires a monthly fee to be included in your mortgage payments. The cost of PMI varies according to the amount of your down payment.
FHA also charges a fee for mortgage insurance and it is called a Mortgage Insurance Premium (MIP). There is both an up-front fee (which may be financed) and a monthly charge.
DVA charges a funding fee, which may also be financed.