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Step 1
PITI – principle, interest, taxes, and insurance. This is your monthly mortgage that you will pay each month for the next 15 or 30 years depending on your mortgage term. The principle is the amount of money borrowed from bank without any interest. The interest is calculated based on an interest rate that the bank approved you for at the time of purchase. Taxes are the property taxes that you will have to pay every month; this is depended on your original purchase price. Insurance is the insurance you buy for the property that you live in. This is a very important part of the mortgage home equity loan terms that you should know how much you are paying for each.
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Step 2
P & I – principle and interest. After you have finished your payments for the property that you own, the principle and interest is no longer paid to the bank. At this point, you can deduct this from your monthly mortgage payments. Taxes and insurance are still paid every month. This is a crucial part of mortgage home equity loan; it is the part that you owe to the bank.
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Step 3
Another thing is the points for the loan. Generally speaking, the higher the points, the higher the closing cost and a lower interest rate is charged for amount borrowed from the bank. Each point is equal to one percent of the principle intended to borrow from the bank. Make sure you purchase some points for your mortgage home equity loan to lower monthly payments.
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Step 4
Closing costs – these are one time fee that you pay meaning it is not recurring like the mortgage itself.
Comments
sonni57 said
on 7/16/2009 Many people don't understand mortgage terms this will enlighten them.