UNDERSTANDING YOUR MORTGAGE PAYMENT
When we think about a mortgage, the principle and interest are often all we consider. But there is much more that goes into a mortgage payment that you need to take into account. It is important to understand all the components of a mortgage payment to ensure that you are protected and can afford the monthly payment. · Principle – The principle is the actual loan amount that you borrow from a lender. In the case of owner financing, it is the sale price of the property minus the down payment. A portion of each monthly payment that you make goes towards the principle. In the beginning only a small portion of your payment goes towards the balance of your loan, while a majority goes towards the interest. Gradually, as time goes on, more of your monthly payment will be used to pay off the balance of your loan and less will go towards the interest. This is the standard way an amortization (or loan repayme...