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Details Of GA Recurring Mortgage Payments

May 5, 2015

From Loan Officer John Hendley

From Loan Officer John Hendley

It is useful to understand details of GA recurring mortgage payments to better budget for home ownership costs. The acronym PITI is commonly used to represent the items included, which are principal, interest, taxes, and insurance. All mortgages do not automatically include all of these. It may differ based on your specific mortgage.

Details Of Recurring Mortgage Payments

Paying Down Principal

Principal represents the balance of a mortgage. For most loans, a portion of the monthly payment is allocated towards reducing the principal, however there are exceptions to this such as interest only loans. In the first several years of making payments, very little of the payment will go towards principal, but this increases over time.

Loan Interest

Interest is the fee charged by banks for use of money they lend. The interest rate is always a yearly figure but billed monthly calculated on the balance of the loan. Based on the type of loan, the rate will stay the same for the entire life of the loan or it can fluctuate at specific intervals.

Taxes

Taxes are levied by GA based on the assessed value of real estate. The total is determined yearly but typically due at specific times of year. Overdue taxes will be a lien on a property and supersede mortgage liens. Many mortgage companies will, as a result, ask homeowners to set aside funds into an escrow account to guarantee that there are enough funds to pay the bills when they are due. Those funds are collected monthly by the lender as part of the regular mortgage payment. The lender then pays the taxes directly instead of relying on the homeowner to do so. It is a means of protecting their investment.

Insurance

There are different types of insurance for a loan. Property is commonly a requirement whereas mortgage insurance varies based on the specific program. Both may be included in monthly loan payments.

Property insurance covers damages. Mortgage companies require this insurance since the property is collateral on the loan. Insurance premiums are payable annually and many will require funds be put into escrow (similar to tax escrow). They will then pay your premiums directly to make sure the policy does not lapse.

Mortgage insurance is common for financing with less than twenty percent down payment. It protects the lender should a borrower fail to make payments. Lenders expect that they will not recover the full amount owed to them if the home forecloses, so the mortgage insurance covers some of that. Even though it benefits the lender, the borrower is responsible for the premiums.

Knowing GA Recurring Mortgage Payments

Not all financing is structured the same and as a result not all GA recurring mortgage payments will contain each of the components above. There can be other monthly fees such as condo fees, which are not collected by lenders but are an important consideration in estimating total monthly housing expenses. Remember that final amounts are based on a specific property and interest rate, so any up-front figures are likely to change. To obtain an estimate on your monthly payments, contact Guaranty Mortgage via phone at 770-614-7425 at www.GuarantyMortgage.com.

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