Can You Afford a Mortgage Payment?
Before you go shopping for your perfect home, you want to know how much home you can truly afford as well as what exactly is included in your mortgage payment.
Most mortgage payments include 4 components: the principal, interest, insurance and taxes.
The Principal is the amount that pays down your outstanding loan amount. Interest is the cost of borrowing money. Taxes are the property assessments collected by the city or county in which the property is located. Insurance offers financial protection from risk. Your homeowners insurance payments are typically held in an escrow account, and then paid on your behalf to the insurance company.
Below is an example of a mortgage payment to purchase a $400,000 home and what the cost may look like in the 4TH Quarter of 2021: