Property & School Taxes
As a property owner, youll be responsible for paying property and school taxes. If youd been renting previously, this will likely be new for you.
Luckily, for many first time homebuyers, Escrow makes paying your annual taxes easy! With Escrow, a portion of your monthly mortgage payment is set aside to be used for covering the taxes on your new home. By incorporating tax payments right into your monthly mortgage payment, you wont have to worry about saving to cover your school and property taxes.
How Does A Mortgage Work
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A mortgage is likely to be the largest, longest-term loan youll ever take out to buy the biggest asset youll ever own your home. The more you understand how a mortgage works, the better equipped you should be to select the mortgage thats right for you.
Its A Good Time To Apply For A Mortgage With Assurance Financial
When youre ready to take the exciting step of purchasing a new home, work with Assurance Financial to take advantage of historically low rates.
We make it easy to apply for a mortgage and estimate costs during the process, and you can get prequalified in 15 minutes. Our licensed, approachable, trustworthy loan officers have the industry knowledge and expertise to get you custom competitive rates. And we have just about every type of home loan available, from conventional loans to FHA and VA loans to loans designed specifically for jumbo or modular homes.
Whether youre a first-time homeowner, downsizing, dreamsizing or looking for an investment property or a vacation home, we can make getting started with your loan quick and convenient. And because were an independent lender rather than a mortgage broker, we give you the security and peace of mind of knowing well never pass your loan or personal data on to anyone else.
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Thats A Lot To Remember About Mortgages
If you have trouble remembering all the little details that go into your mortgage payment, just remember the acronym PITI: Principal, Interest, Taxes, and Insurance. Make sure you take all of these factors into account when figuring out how much you can afford to spend on your next home.
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How Much Of A Mortgage Goes To Principal
The amount of mortgage going to principal varies depending on how long you have been paying the loan. While your monthly payment may be the same each month, different portions are designated for different parts of the loan in reality. In most cases, lenders will see that most early payments go towards paying off the loans interest. This is to ensure they get paid upfront. As the loan term carries on and the interest is paid down, more of the monthly payment will go directly to the principal. The reason for this is because of loan amortization, which essentially breaks down your payment schedule. Several amortization calculators online can reveal exactly how much of your payment is going towards the principal. I recommend using this calculator provided by Bankrate.
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Understanding Mortgages: An Overview
As a first-time home buyer, youâll want to learn as much as you can about mortgagesâwhat they are, how they work and how they can benefit you. While you may be consulting a mortgage specialist during the home-buying process, the more knowledgeable you can become about mortgages, the more likely youâll be able to articulate what you needâand wantâin a mortgage.
Hereâs a short primer on mortgages and key mortgage terms to help get you started.
Do Mortgage Payments Go Down Over Time
With a typical fixed-rate loan, no â your mortgage payment will not decrease over time.
However, your mortgage payments makeup does change over time because of how your amortization schedule â the schedule of your payments â distributes interest payments and principal payments. Generally, your initial mortgage payments favor your interest. Youll be paying off more of your interest at first and less of the principal. Over time, as you pay down your home loan, your payments start to include more principal and less interest.
The result is that you pay down your interest faster than you pay down your principal. Why?
At the beginning of your loan, you naturally have a higher loan balance. So you owe more interest every month once you apply your interest rate to that loan balance. As time goes by and your loan balance decreases, youll owe less interest every month. So most of your payment will then go toward the principal, even though your total payment stays the same.
All that said, your mortgage payments may change slightly because of alterations in your insurance or tax rates. If your homes value rises, for instance, your property taxes will likely rise as well, increasing your overall mortgage payment.
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New Homebuyers Need Help Calculating Your Mortgage Payments
As a new homeowner, with one easy monthly payment, youll cover a number of expenses associated with your new home.
At Maple Tree Funding, we make sure that you completely understand every component of your monthly mortgage payment. Unlike other mortgage lenders, we will review everything with you thoroughly and disclose every cost you should expect ahead of time, so you dont encounter any surprises when it comes to paying for your home.
Wondering how much you can afford to spend on a home? Interested in a New York home and wondering what your monthly mortgage payment would be? We can help you figure it out!
At Maple Tree Funding, we have decades of experience helping first time homebuyers. We know the ins and outs of the mortgage process and can guide you every step of the way as you work to purchase your first home.
Interested in learning more? Give us a call at or contact us online to find out how we can help make the home buying process easier for you.
Can I Overpay On My Mortgage
Most mortgages will allow you to overpay a certain amount, usually around 10% per year, without incurring any additional charges.
If you can afford to do so, it makes sense to overpay as you will clear the mortgage more quickly, saving money on interest payments in the process.
Lets go back to our example above of a £200,000 mortgage on a 25-year term with a 3% interest rate. If you overpaid by £90 a month, you would clear the debt in just 22 years, saving you three years worth of interest payments on the loan. This would mean a saving of £11,358.
- Find out more: mortgage overpayment calculator
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Choose An Accelerated Option For Your Mortgage Payments
An accelerated payment option lets you make weekly or biweekly payments. With this option, youre putting more money toward your mortgage than with a monthly payment.
Accelerated payments can save you money on interest charges. By accelerating your payments, you make the equivalent of one extra monthly payment per year.
Mortgage Amortization: A Personal Decision
The decision between a short or longterm loan should depend on your personal finances.
If you have a lot of monthly cash flow, and you want to save on interest, choosing a 15year loan or shortening your amortization schedule with extra payments could be a smart strategy.
If you have a tighter budget or you want to invest your money elsewhere the traditional 30year amortizing mortgage makes a lot of sense.
Compare all your loan options before buying a home or refinancing. And make sure you understand how amortization will affect your monthly payments, as well as your home equity options further down the line.
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Understanding Mortgage Prepayments And Charges
Understanding Mortgage Prepayments
Some homeowners find themselves able to pay off their mortgage early, or they wish to break their current mortgage. However it’s not always easy to make sense of a mortgage provider’s prepayment charges.
Since we understand that being mortgage-free is an important goal for many of our clients, Scotiabank has established some of the most competitive prepayment terms among the other financial institutions. For example, all of Scotiabank’s mortgages include prepayment privileges and unique Match-a-Payment® options.
To help customers make informed decisions, we provide a user-friendly guide, What You Need To Know About Mortgages & Mortgage Prepayment Charges , which includes a glossary of commonly used mortgage terms, provides a mortgage type comparison and suggests ways you can pay off your mortgage faster without having to incur a prepayment charge. It also explains how prepayment charges are calculated and options available that would not require any prepayment charges to be collected.
We also offer the Mortgage Prepayment Charge Calculator to estimate an approximate prepayment charge that would be applicable as of today’s date. You can change the information you enter such as prepayment amount, or the remaining term, so you can see how these changes can affect a prepayment charge.
To use the calculator, you should gather the following information:
Mortgage Breakdown: Homeowner Q& a
Mortgages are notoriously complicated, regardless of whether you are a new or seasoned homeowner. Not all of us can be brilliant with financial concepts, but it is important to understand exactly how mortgage loans operate as consumers. Here, you will find explanations for some of the most common mortgage breakdown questions:
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Still Confused Get In Touch
Mortgages provide the opportunity for homeownership without the need for a large down payment. Its essential to understand the structure of your mortgage payment, as well as how the total amount due is applied towards the principal, interest, taxes, and insurance.
If all of this still has you a bit confused, were here for you. At GoPrime Mortgage, Inc., our local lenders will help you every step of the way as you navigate the homebuying process.
Other Items To Watch Out For On A Mortgage Statement
Delinquency notice
If you fall behind on making your mortgage payments, your mortgage statement will include a delinquency notice. This usually happens after your loan is 45 days late. The delinquency notice will provide information on how to bring the loan current. Once your mortgage payment is 30 days late, your mortgage lender typically reports this to the credit bureaus. A late mortgage payment does more damage to your credit score than other types of late payments. It can also affect your eligibility for refinancing or a new home loan later on.
Escrow balance
Some lenders require you to keep a certain amount of money in this account to cover any increases in your taxes or insurance. The minimum cash cushion can be as much as two months worth of escrow payments. Most lenders send an annual escrow account statement, separate from the mortgage statement. If theres a surplus of $50 or more in the escrow account, or if theres not enough money, this document will include either a rebate check for the extra money or a request for additional payment.
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Getting Started With Calculating Your Mortgage
People tend to focus on the monthly payment, but there are other important features that you can use to analyze your mortgage, such as:
- Comparing the monthly payment for several different home loans
- Figuring how much you pay in interest monthly, and over the life of the loan
- Tallying how much you actually pay off over the life of the loan, versus the principal borrowed, to see how much you actually paid extra
Use the mortgage calculator below to get a sense of what your monthly mortgage payment could end up being,
What Is Mortgage Loan Amortization
Mortgage loan amortization is the process of paying a home loan down to $0.
A mortgage or any other type of loan is amortized if its paid in regular installments and will be fully paid off after a set period of time.
Your mortgage amortization schedule determines when your home will be paid off and how quickly you build home equity. It also comes into play if you want to pay off the loan early. So its important to understand how your amortization schedule works.
In this article
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Mortgage Breakdown: What Are The 4 Parts Of A Mortgage Payment
A mortgage payment has four parts: principal,interest, taxes, and insurance. A principal is the repayment of your loan amount, which typically adds on interest, or the profit that goes to the lender, while taxes represent the portion that goes to the government, and the insurance is what protects lenders in the case that a loan goes into default.
If you have ever made mortgage payments before, have you ever stopped to think exactly what the mortgage breakdown looks like? Or were you under the assumption that you were chipping away at a lump sum? As it turns out, the anatomy of a mortgage payment is a lot more complex than that. For example, if you put down less than 20 percent towards your down payment, then your mortgage loan breakdown most likely includes private mortgage insurance as well, to be discussed later on. Keep reading to learn more about the role each of these components plays in the mortgage payment breakdown:
Calculate Your Monthly Payment By Hand
You can calculate your monthly mortgage payment, not including taxes and insurance, using the following equation:
M = P /
P = principal loan amount
i = monthly interest rate
n = number of months required to repay the loan
Once you calculate M , you can add in the monthly property tax and homeowners insurance premium, if you have them. These are fixed costs that aren’t determined by how much you borrow from the bank, so they can easily be added to the monthly cost.
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What Happens If Your Mortgage Is Foreclosed
There are two ways a lender can collect if you fall behind on payments through the courts in a process called judicial foreclosure, or with a trustee in a process called non-judicial foreclosure. If you cant make your payments, its essential you know the timeline and processes for how long a foreclosure will take.
Judicial foreclosure. A judicial foreclosure is a court process and generally takes much longer than a non-judicial foreclosure. It gives you more time to either find a way to bring the mortgage current or make plans for other housing arrangements.
Non-judicial foreclosure. If you signed a note and a deed of trust at your closing, then you are probably in a state that allows a non-judicial foreclosure process. The courts are not involved in this process, and the foreclosure process timeline may be much faster, leaving you with less time if you are unable to bring the payments current.
Things To Do Before Shopping For A Mortgage
Buying a home may be the largest purchase of your life, so its a good idea to know the following factors before you start shopping.
1. Know your credit score and take steps to boost it
Your credit score is one of the most significant factors in getting approved for a mortgage, and it also influences the interest rate youll end up with. You can check your credit score and improve it by:
- Requesting a free credit report from annualcreditreport.com
- Disputing any errors that may be dragging your score down
- Keeping your credit card balances low, or better yet pay them off
- Paying all your monthly bills on time
2. Find out how much you can afford
Check out our affordability calculator to get an idea of where you stand before you start looking for houses. Remember that your monthly payment will be more than just principal and interest. It will also include homeowners insurance, property taxes and, potentially, mortgage insurance . Also, be sure you budget for:
- Utilities
- Maintenance costs
- Extra mortgage reserves in case of a financial emergency
3. Shop around for your best deal
Whether you choose a government-backed or conventional loan, fees and interest rates can vary widely by lender, even for the same type of loan, so shop around for your best deal. Collecting loan estimates from at least three different mortgage lenders can save you thousands over the life of your mortgage. You can start your search by comparing rates with LendingTree.
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What Is A Mortgage Payment
Your mortgage payment is how you pay back your home loan. Usually, this will be a once-per-month payment that helps you pay off your mortgage step-by-step. It will also include interest due to your lender, insurance payments and taxes.The ability to make installment payments is what enables most people to buy a home that would otherwise cost hundreds of thousands of dollars in cash. The way these payments are scheduled over the life of your loan is known collectively as mortgage amortization.
