monthly principal and interest payments?

Question

and you pay the morgage payments. what? I just need it explained. Thanks. no screwballs please ,just serious answers.

Answer 1

When you borrow to buy a house, the loan is called a mortgage.

Every mortgage has interest you have to pay to the bank for using their money. If its 10 percent a year, that means for borrowing $1000 each year you have to pay the bank $100 interest.

The amount you borrow -- and have to pay back -- is called the principal amount of the loan.

But monthly mortgage payments are higher than the interest charge for the month. The amount you pay thats over the interest charge goes to reduce the amount you borrowed -- thats called paying back the principal.

So every month the mortgage payment includes a part that is the interest you owe for the month, and a part that is a payment of principal back to the bank to reduce the amount of your loan.

And each month, because the loan is reduced by the principal part of the last payment, the interest charge is slightly lower -- which means the part of the payment that is principal repayment is a little higher.

This is how, for a 30 year conventional mortgage with fixed payments, the mortgage loan is fully repaid at the end of the 30 years.

And thats the truth. PBBBBLLLLLLLTTTHHHHHHHHH!!!!!!!!!!!

Answer 2

The mortgage payments that you pay monthly include the interest on the money you have borrowed for that month and a little to pay down the actual amount that you have borrowed.

For example:

If you borrow $100,000 at 5% to be paid off over a 25 year time span (amortization) and pay for the house on March 1, 2007 your first payment is April 1st, 2007. The first payment of $584.59 includes $416.67 that goes to interest and the remainder $167.92 goes to pay down the $100,000 you borrowed. So now you have left to pay off $100,000-$167.92 or $99,832.08. So your next payment of $584.59 will have a little more going towards paying down the amount that is now $99,832.08 and a little less going to interest because the amount is less than the original $100,000.

The payments each month remain the same amount but each month a bit more goes to pay off the amount that is owing (which decreases each month) and a little less goes towards interest. By the last payment the payment of $584.59 is almost entirely the amount left owing.

Answer 3

Not sure what you are asking either, let's see if this helps.

PITI = Principle, Interest, Taxes, and Insurance
Interest = profit for the bank for loaning you money for the house
Principle = rest of your payment that is not interest. Eventually you will pay exactly how much you borrowed in principle, at that point the loan is paid in full. The rest is all interest

When you make a mortgage payment you will either pay just principle and interest, or PITI. If you are not paying PITI to your mortgage company than at given intervals, you will have to personally pay for your property taxes and insurance. Making one payment to your mortgage company is called "escrowing." An escrow account is an account where the monies are to be paid out per a specific contract. So, the mortgage company often sets up an escrow account and you pay into that acount. Then, the manager of that account uses its funds to pay the mortgage, which includes both principle and interest, taxes, and insurance.

Answer 4

what is the question? if you make these payments and keep the taxes and insurance current at the end of the term you get your mortgage back in the mail and a release of lien is filed in the court house so it becomes yours free and clear. Is that what you are asking???????

Answer 5

could you be a little more specific in your questioning?

Answer 6

not sure i understand your question

Answer 7

dont get your question