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  • Writer's pictureMolly Reed

What are the Components of a Mortgage Payment?

Demystifying Your Mortgage Payment: Exploring the Heart and Soul of Homeownership


Welcome, future homeowners! As you embark on the exciting journey of purchasing your dream home, it's essential to understand the various components that make up your monthly mortgage payment. In this blog post, we will break down these components in a clear and concise manner, providing you with valuable information to navigate the world of homeownership. So, let's dive into mortgage payments!


Have you heard of PITI?


1. Principle - The Foundation of Your Investment: The principle refers to the amount you borrow from your lender to purchase your home. Think of it as the initial investment that sets the stage for your homeownership journey.


2. Interest - The Cost of Borrowing: Interest is the cost of borrowing money from your lender. It's crucial to understand how interest rates impact your monthly payment. A lower interest rate can save you thousands of dollars over the life of your loan. In the beginning of your loan most of your monthly payment is going towards interest.


3. Taxes - Supporting the Community: A portion of your monthly mortgage payment goes towards property taxes. These taxes support essential services such as schools, infrastructure, and public safety. Understanding how property taxes are calculated is important for budgeting purposes.


4. Insurance - Protecting Your Investment: Homeowners insurance is a safety net that protects your property against unforeseen events such as fire, theft, or natural disasters. Additionally, private mortgage insurance (PMI) may be required if your down payment is less than 20% of the home's value.


Are you currently renting? Your monthly rent is covering the owner's PITI payments (and then some!). If you're interested in looking into how much home YOU can afford get in touch with me! We can come up with a plan so that you are paying comfortable monthly mortgage payments all while building equity for the future.




Understanding the components of your mortgage payment is vital for every potential homeowner. By breaking down the principle, interest, taxes, and insurance, we've provided you with valuable insights that empower you to make informed decisions. Our team is here to guide you through every step of the process, ensuring a smooth and rewarding homeownership experience. Let's turn your dreams into reality!


Now that you know what goes in to your monthly payment, take a look at this blog post "How Much Cash do I Need to Buy a Home?" to find out how much you'll need to save!

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