When it comes to your monthly mortgage payment, the first question is: Where are you in your home buying journey?
Are you refinancing your mortgage for the first time? Learning how to pay a mortgage off quickly? Seeking to find the essential steps to buying a house?
As an experienced home loan officer, I’ve seen first-hand the mistakes that come from misunderstanding or not knowing what your options are and how to navigate the home buying and home loan process. Wherever you are in your journey, having a firm grasp of the basics of home loan financing and knowing how to find the right loan officer will help you avoid common mistakes as a first-time homebuyer or even a real estate investor.
Let’s take a look at the basics of monthly mortgage payments.
What is a Monthly Mortgage Payment?
Your monthly mortgage payment consists of principal, interest, and escrow. If you’re not familiar with escrow, it’s an account in which the lender puts part of your monthly payment in to cover insurance premiums and taxes. You may also have property taxes, home insurance, mortgage insurance, city taxes, and sometimes flood insurance, which accounts for the “escrow” built into your monthly mortgage payment.
Typically, the only time you can choose to waive escrow and only pay principal and interest is if you pay a fee AND you put down at least 20 percent or have at least 20 percent equity (assuming this option is available on your loan type). Some loan types will not allow you to waive having an escrow account under any circumstance.
The Danger of Calculating Monthly Mortgage Payments
I advise all of my clients to research and plan ahead when entering the home loan process. However, you can be unintentionally led down the wrong path. For example, if you visit a website that supposedly estimates monthly mortgage payments for you, you need to ensure that it includes all the pieces to the puzzle.
I can’t tell you how many times clients have come to me only to find out that they have been looking in a dramatically wrong price range based on misinformation from the Internet. Escrows tend to be left out of online equations or are drastically inaccurate in the estimates, giving you a much lower estimated monthly mortgage payment than what you will realistically have.
Get the answers you need from a loan officer that truly cares about your success. Call our office at 985-300-LOAN or contact us through my website HERE
Check out Stephanie’s video on Monthly Mortgage Payment for more information here: