What’s in my mortgage payment?

by | Oct 30, 2016 | Real Estate | 0 comments

​Upcoming Free (& non-promotional) Home Buyer Classes:

Saturday November 5th , from 9am-12pm (ish)

Marshall Community Center, conference room
1009 E. McLoughlin Blvd, Vancouver WA (kitty corner from Clark College)

Thursday night, November 10th , from 5pm-8pm (ish)
Marshall Community Center, conference room
1009 E. McLoughlin Blvd, Vancouver WA (kitty corner from Clark College)

Saturday, November 19th, from 11am-2pm (ish)

Vancouver YMCA, conference room
11324 NE 51st Circle, Vancouver WA (corner of SR500 & Gher Road/112th Ave)

If these class dates and/or times don’t work for you, please let us know.  We understand that you have lives, and families, and work.  We will work something out that works better with your schedule.  Just let us know….
….we also have home seller classes available too…link on left on website

Remember…with reservation…we will throw in lunch, or dinner!  😀
~~~~~~~~~
Happy Halloween!

Another quick reminder that we have our Winter Client Appreciations coming up…  yep, plural this year!  Chris Berg and I are honored to invite you to either Disney’s Moana on Saturday, 12/3 from 3pm-6pm….OR… Star Wars: Rogue One on Saturday, 12/17 from 3pm-6pm (time could change slightly for Star Wars).  Please let us know which movie you would like to attend and I will send you the link to get your tickets.  😀  Tickets are first come, first served…and no assigned seating.  Chris and I want you to know that we appreciate you!  We appreciate your trust, your friendship, and your referrals!  So…come watch a movie with us!!  😀  Please email jkomp@pcmloan.com for the reservations link.

Buying a home will be the largest purchase you ever make.  The only thing that will cost your more than buying a home is having a child.  🙂  Like a child, you have to take care of your home though, and there is more to home ownership than most people realize.

Every month you pay bills, and your mortgage payment will most likely be your largest monthly expenditure, but what is it?  We talked last week about how a mortgage payment works, but this week, let’s talk about the five parts of a mortgage payment.

Now…what is all in your payment?

There are four parts to your mortgage payment…it is called a PITI payment.  What that means is Principal, Interest, Taxes, and Insurance.  For example, my payment is $1600, but my principal/interest portion is only $1000 a month, the other $600 a month is put into an escrow account.  Out of this account comes my homeowners insurance payment once a year, my flood insurance (I live in a flood plain and am required to carry this) payment once a year, and my taxes are also paid from this account twice a year.  All of these fees are wrapped into my monthly payment for me.  Anytime you are using a FHA, or any government type of loan like RD (USDA), or the downpayment assistance programs & grants (like Home Advantage or the NHF), these fees must be wrapped into the mortgage payment.   If you don’t have a 20% down payment (like 99.9% people), then your mortgage payment will actually have FIVE PARTS with the fifth part being Mortgage Insurance.

Mortgage Insurance vs Homeowners Insurance
Mortgage insurance is different than home owners (sometimes called, Hazard) insurance.  In a nutshell, mortgage Insurance protects the lender in case you default on your loan, and homeowners insurance protects you & the lender in case something happens to the home….ie.. a fire, a tree falling on your home, a car driving into your home, burst pipes, etc.

Homeowners Insurance
Now, please remember, you do choose your insurance company!  One of the things I suggest to clients is to contact their insurance company after they make their offer and to do a couple of things…(1) Has there been any water of fire claims in the past 3-5 years on this home?, and (2) How much would the insurance be for this home?  Average homeowners insurance is about $500-$700 a year….again, it is wrapped up into your monthly mortgage payment so it is not another extra expense.  You do get to choose your company, and many companies will give you discounts for ‘bundling’ your policies.  It doesn’t hurt to call around for quotes.  Once you choose a company request that your insurance agent send over an ‘insurance binder’ over to your lender.

Property Taxes
Taxes are decided by the county, and are usually paid twice a year.  You may get a copy of the tax bill, but again, it is paid by your mortgage company out of your escrow account.  I always get phone calls when these bills come out.  😀  No worries…it is just for your records, and I encourage your phone calls!!  🙂  Please remember that ‘Tax Assessed Value’ is NOT market value.

Principal & Interest
Now…your principal and interest portion of your mortgage payment.  As we know a portion of your mortgage payment every month goes toward the principal amount that your borrowed to purchase your home, and a portion goes toward the interest that the lender is charging you.  In the beginning of your loan the smaller amount goes toward principal, and the larger portion goes toward interest…this eventually switches.  We all know the wisdom of making an additional payment every year on your mortgage to reduce your loan time.  Some banks will offer to take your payment in two week portions, and make your additional payment for you.  Honestly I don’t advise this…..before you think I am crazy, this is the reason why….the bank actually holds your money and makes your additional payment at the end of the year.  This isn’t the best way for you, really….  I always pay between $25-$100 extra on my mortgage every month depending upon our finances that month, but apply it directly towards my principal borrowed amount.  At the end of the year I have made that extra payment directly towards my principal, which is less money I can be charged interest on!  This will shorten my loan length considerably.  In the end I actually pay MORE on the principal amount than I would have if I had just made one extra payment.  My suggestion to all my clients is to take that $20 from each paycheck and put it into that credit union far away (with no debit card or checkbook for) that is for your home repairs that are needed as a homeowner.  If you just put at least $25 per month extra toward your principal loan amount you will also be shortening your loan time.  This sounds like a lot…but really is it?  It is a trip to McD’s (for my family anyhow as we have 2 adults, a first grader, and either my adult son, and/or my adult daughter and her fiancee.), or a couple of Dutch Brothers trips a month…but it will help you in the long run immensely.
So there are the 5 parts of your mortgage payment…Principal, Interest, Taxes, and Insurance…both Mortgage & Homeowners…..all tidily wrapped up into one payment every month..

Yay!  I kept it shorter this week!  😀  It’s like going to the grocery store, and only coming out with the items you went in for!!

Information is power, and I hope that I am able to help you.  Good luck, and as always…May the odds be ever in your favor out there….  AND If you are looking for a real estate agent, I would love to be able to help you.  

As always….this is just a quick overview…. again…and I can’t say this enough…please remember that your agent is NOT a salesperson, and should not be acting like one.  Real Estate is not really about houses, it is about relationships.  Your agent, and your lender work for YOU.  You drive the bus…we are merely GPS to help you get to your goals.  Like the classes, this weekly blog email is to help you with your home adventure.  The goal is to be informative and non-promotional.  🙂  We are, however, hoping you will call and want us to help with your adventure.

If you have any questions about this, or something you have heard…or if you would like me to help you with your home adventure, please call, email,  text, or facebook me anytime.  I am, as always, happy to help!

Thank you again for your business and your referrals!!  …and thank you for referring these classes to your friends, family, and co-workers.

.   ..disclaimer…if you have already purchased a home, or would no longer like to receive these emails, please let me know and I will be happy to remove you from any further mailings…

Upcoming Topics: Escrow Accounts, and what they do
Last Week:  Sellers & Dual agents explained…

Have a great day, and I will talk to you soon,
;-D

Tracie DeMars / Realtor

ReMax Equity Group
License# 81289
Vancouver, WA
360-903-3504

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