What is the Real Cost of a Mortgage? federal home loan bank system
from servicemagic.com
The total cost of a mortgage is comprised of four main elements:
1. Principal federal home loan bank system
2. Interest
3. Taxes
4. federal home loan bank system Insurance
PITI is part of the formula that mortgage lenders use when calculating your affordability ratios. federal home loan bank system Many times home buyers ignore these federal home loan bank system additional costs when figuring how much of a home they can afford.
Principal federal home loan bank system
Principal represents the amount you borrow, which has to be repaid over time.
Interest
Interest is the cost that federal home loan bank system mortgage lenders charge for the use of their money during your repayment schedule. federal home loan bank system
Taxes
Taxes are an assessment that local governments collect on property to pay for local services. federal home loan bank system Property tax rates will vary by location and can affect your total cost and affordability.
Insurance federal home loan bank system
Homeowner's Insurance will be required to replace the value of loan in the event of a disaster such as fire, federal home loan bank system earthquake, flood, etc.
Understanding Escrow
Property taxes and insurance costs must be collected and paid when they are due. federal home loan bank system
