A mortgage payment is a monthly payment that generally consists of 4 parts:

  1. Principal & Interest – This is the portion of the payment that goes towards the loan balance plus the interest you pay as a cost of financing.
  2. Escrow* – Taxes & Insurance
    • Taxes – This is the portion of the payment that goes towards your annual county tax bill.
    • Homeowners Insurance – This portion of the payment goes towards the annual premium of your homeowners insurance policy. If your home is located in a flood zone you may also be required to carry Flood Insurance as a separate policy which can also be a part of your monthly payment
  3. Private Mortgage Insurance** or PMI – This is a premium paid to cover the lender in case of a default on the loan. Generally it is required on any home loans with than a 20% Down Payment for a new purchase and more than 80% Loan to Value on Refinance Loans

*Escrow can be waived when putting 20% or more Down Payment when purchasing a home.

** Private Mortgage Insurance can be removed from your loan payment 2 different ways after purchase.

  1. When your loan naturally reaches 78% Loan to Value (LTV) with Conventional Loans or upon request at 80% Loan to Value (LTV)
  2. You can refinance your original loan to remove Mortgage Insurance. To Learn More (Link) about how to remove Mortgage Insurance by Refinancing your loan click here.

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