4 Parts Of Your Mortgage Payment
Your monthly mortgage payment is typically made up of four parts:
- Principal is the amount of money you borrowed.
- Interest is the cost of borrowing the money.
- Taxes are the property taxes charged by your local government. Typically we collect a portion of these taxes in every mortgage payment and hold the funds in an escrow account for tax payments made on your behalf as they become due.
- Insurance refers to homeowners or hazard insurance that provides protection against property damage due to wind, fire or other risks. Like taxes, insurance costs are typically collected and paid from an escrow account.