Understanding Your Mortgage
A mortgage is a loan used to purchase a home. Understanding the components of your mortgage payment helps you make informed financial decisions.
Payment Components
- Principal: The amount borrowed to buy the home
- Interest: The cost of borrowing money
- Property Tax: Annual taxes based on property value
- Insurance: Protection against damage and liability
Tips for Home Buyers
- Aim for a 20% down payment to avoid PMI
- Shop around for the best interest rates
- Consider a 15-year loan to save on interest
- Factor in closing costs (2-5% of loan amount)