What you can afford to pay each month for your mortgage?

You’ve decided what you can afford to pay each month for your mortgage. Great! But have you considered the other expenses that may be part of your monthly payment?

Four components typically comprise your payment: principal, interest, taxes and insurance. You may see these referred to as PITI. Here’s an explanation of these pieces.

• Principal: A portion of each mortgage payment is dedicated to repayment of the amount you originally borrowed, the principal. For example, if you borrow $100,000, that’s the principal. Loans are structured so early in your mortgage’s term, your payments will be applied mostly to the loan’s interest. As the term of the loan progresses, you’ll pay off more principal.
• Interest: The lender charges you a percentage of the loan’s principal to offset the risk he or she incurs by lending you money. Because the interest rate on your loan directly relates to the size of your payment, a higher interest rate leads to higher monthly payments.
• Taxes: Depending on where you live, property taxes can be a significant amount of your monthly payment. These taxes for local schools, city and county services, and other local entities are based on the tax rate for each of those taxing authorities and the appraised value of your property. Your yearly bill is divided by the total number of payments in a year, and your lender collects the appropriate monthly amount, holds that money in escrow, and then pays the whole bill when it’s due.
• Insurance: Two types of insurance coverage may be included in your payment. Just like the property taxes that you might pay in small amounts instead of one annual bill, insurance payments can be made with each mortgage payment and held in escrow. The first type of insurance is property insurance, which protects the home and its contents from fire, theft, and other mishaps. The second type of insurance is PMI, which stands for private mortgage insurance. If you have a small downpayment—typically less than 20% of the property’s value—you may be required to have PMI. This insurance gives the lender protection in case you default on the loan.

Some lenders allow you to handle taxes and insurance on your own, which gives you a lower monthly payment—but you must budget for those big, annual expenses. Talk with your lender to understand what your total monthly outlay will be.

Call to get help and get started today:  

Mary "Suzohne" West Sr. Loan Officer

(702) 427-4075
(NMLS 257735 // CA-DBO25735 // NV 41975)
SecurityNational Mortgage Company (Lic 3116)
Direct: (702) 427-4075 // Direct Fax: 1 (888) 218-9265 // suzohne.west@snmc.com

3285 N. Fort Apache Rd., Las Vegas, NV 89129 // Main (702) 562-8733