im clueless, where do you even find this on your mortgage documents?
2007-02-26 06:02:04 · 6 answers · asked by sweetfry83 1 in Business & Finance ➔ Renting & Real Estate
Your lender is required to give you a "truth in lending" breakdown of actual costs prior to the closing. What you are looking for is the PITI part-- "Principal, Interest, Taxes, Insurance". If you are putting over 20% down, you don't have to have the taxes and insurance added to the mortgage payment amount, you can elect to pay those yourself when they are due.
2007-02-26 06:11:06 · answer #1 · answered by Anonymous · 0⤊ 0⤋
When buying a home it should be clearly marked in the right hand column.
The principal is the price you are paying for the home. Lets say you made an offer of 150,000 and it was accepted. This is the price you are paying. It should then show who is offering the loan, what your % interest that you are paying for the loan and when your payments are due. It will calculate the principal and the interest paid each month into your total payment plus the insurance for the mortgage. It should be broken down.
Remember, many loans you are paying all interest or mostly interest until you get the figure down and it depends on the length of the loan (30 yrs or 20 yrs).
If you do not understand your documents, contact the Mortgage broker that put together this loan. They are required by law to explain it in detail if need be before your sign the papers. Tell them you do not fully understand.
And remember your Real Estate Agent is working for you (hopefully, you have one). They are required to make sure you understand everything and that it is in your best interest. This must be your agent not the sellers agent as he is working for the seller.
Ask for help.
2007-02-26 06:11:00 · answer #2 · answered by Nevada Pokerqueen 6 · 0⤊ 0⤋
P = Principal - the purchase price of real property
I = Interest - the cost to finance the Principal over the Term of the loan
T = Taxes - property taxes for the year figured on a monthly basis
I = Insurance - the cost of hazard insurance premium policy for a year figured on a monthly basis
Your monthly payment would be P+I+T+I.
2007-02-26 06:17:51 · answer #3 · answered by Art 4 · 0⤊ 0⤋
THE PRINCIPAL IS THE ACTUAL LOAN AMOUNT, WHAT YOU OWE. INTEREST IS THE PERCENTAGE YOU ARE PAYING FOR THE PLEASURE OF THE MORTGAGE. INSURANCE BENEFITS BOTH YOU AND THE BANK. IF YOU DIE, YOUR LOAN IS PAID OFF. YEAH, REALLY. I'M NOT SURE THEY DEFINE THESE FOR YOU ON YOUR MORTGAGE PAPERS. HEADS UP, IF YOU PAY ONE MORE INTEREST PAYMENT EVERY MONTH YOU WILL PAY OFF YOUR LOAN WAY FASTER, THIS IS BECAUSE YOU DON'T PAY ON YOUR PRINCIPAL UNTIL YOU PAY THE INTEREST. I KNOW SOMEONE WHO PAID 2 PAYMENTS EVERY MONTH AND PAID OFF A 30 YR LOAN IN 15 YRS. YOU MUST TALK TO AN EXPERT ABOUT THIS, SOME THINGS MAY HAVE CHANGED, YOU ALSO HAVE TO TELL THE BANK THE EXTRA MONEY YOU ARE PAYING GOES TOWARD INTEREST.
2007-02-26 06:11:08 · answer #4 · answered by dtwladyhawk 6 · 0⤊ 0⤋
The principal is the amount of money that you are borrowing. The interest is the charge you pay to the back for borrowing the "principal" This is the banks charge and is their profit and this is the amount you may be able to deduct from your taxes. The insurance is just that. It is insurance you must pay for so that if something happens to you (you dies) the bank gets paid for the money they lent to your by the insurance policy.
2007-02-26 06:10:35 · answer #5 · answered by docholiday 2 · 0⤊ 0⤋
principle is the actual amount of $ needed, interest is what it costs to borrow the $ and the insurance is what you pay in case the house burns down before the loan is paid off....its best to get your own homeowners insurance , because what the mortgage co. offers is only going to cover their losses, not yours (it wouldnt replace your house for you, only the banks $) and it is much more expensive. If you get your own, you shouldnt have to pay insurance to the bank.
2007-02-26 06:07:07 · answer #6 · answered by ikaphant 2 · 0⤊ 0⤋