Buying a home is a complicated process with a lot of terms you don?t normally deal with being thrown at you all at once. Learning the basics of a mortgage can help you navigate the experience with greater ease.
Principal ? The principal is the amount of money you are borrowing from your mortgage lender.
Interest ? Typically a percentage of the principal is calculated as the interest you will be charged for taking out the loan. This amount is spread out across the life of the loan.
Taxes ? Your property taxes are based on a percentage of the value of your property. Typically this is part of your monthly payment and at the end of the year your mortgage broker will either send you a check for this amount so you can pay the taxes or they?ll pay them for you.
PMI ? PMI stands for Private Mortgage Insurance. If your down payment on the home is less than 20% of the home?s total value then you will have to pay a PMI fee monthly in your mortgage.
Foreclosure ? If you cannot or do not make your mortgage payments the mortgage lender can repossess your home and sell it to help defray their costs and recoup what they can on the loan.
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