Breaking Down Your Mortgage Payment: The Key Components Explained by New Priority Lending

Every potential homeowner dreams of owning their sanctuary, but mortgages - those seemingly complex financial tools - often cloud the joy. At New Priority Lending, we believe in illuminating the path to homeownership, making it easy for you to comprehend each facet of your mortgage payment.

A mortgage payment consists primarily of four components, often called 'PITI: Principal, Interest, Taxes, and Insurance.

1. Principal: The Principal portion of your mortgage payment is the amount that goes directly towards repaying the initial loan amount. Every dollar you pay towards this reduces the amount you owe on your home.

2. Interest: Interest is the cost of borrowing money. The bank or lending institution charges you a percentage of the remaining loan balance as a fee for lending you the money. Most of your mortgage payment will initially go towards interest, but as you pay down the principal, the interest portion reduces.

3. Taxes: These are property taxes levied by your local government. They are typically based on a percentage of your property's assessed value and are included in your monthly mortgage payment.

4. Insurance: This portion includes Homeowner's Insurance covering potential property damages and Private Mortgage Insurance (PMI) if your down payment is less than 20% of the home price.

Understanding these components helps you manage your monthly budget effectively and confidently plan your financial future. At New Priority Lending, we strive to make your mortgage process transparent, understandable, and friendly. After all, a well-informed borrower makes a confident homeowner.

Our lending experts are always ready to guide you through your mortgage journey. So, make your dream of homeownership a reality with New Priority Lending - where your home-buying journey is our priority.