What’s in your Mortgage Payment?

by | Nov 18, 2014 | Real Estate | 0 comments

Know someone thinking about buying a home?
Upcoming home buyer classes are:

Thursday, 12/4/14, from 5pm-8pm
Marshall Community Center, upstairs conference room
1009 E McLoughlin Blvd, Vancouver Wa (kitty corner from Clark College)

Saturday, 12/6/14, from 9am-12pm
Marshall Community Center, upstairs conference room
1009 E McLoughlin Blvd, Vancouver Wa (kitty corner from Clark College)

…if these dates/times don’t work for you, we have others. Check out the website for more class dates, times, and locations. PLEASE always check  the website www.freehomebuyerclasses.com for any changes regarding the classes!

Remember…with reservation…we will throw in lunch, or dinner!  🙂
Happy Sunday~

Yep, I am late this week!  It is Tuesday morning, and I am sitting down to get this blog out to you.  I am so glad that you are paying attention here.  🙂  If you are looking for the best time of year to buy a home it is always the winter months….before the tax refunds hit.  Yes, there aren’t as many homes on the market, but during the winter months, you have less chance of running into multiple offers (unless the home is underpriced – beware of the under priced home).  Another excellent thing about buying during the winter is usually the rain.  Why is this a good thing?  The best time to do a home inspection is during the ‘wet’ months because in our area water is the big thing and you want to do a home inspection during a time when you have a better chance to see if there are any drainage, or water issues.  Another good thing about this time of year for buying is that home prices are usually cheaper than they will be during the warmer, drier months when there are more buyers in the market.  The more buyers in the market…drives up the home prices because there is more competition and homes sell quicker.  If you need some time to think about it….buy during the winter.  The weather is your friend right now.  🙂

Speaking of weather… we had a tree blow down in our yard last week due to the weather.  🙁  Weird thing is that it wasn’t even the tree we were worried about either!  It was our curly willow tree and I thought that thing was solid.  Go figure…  Then, to make life even more interesting, my husband was in the ER last Wednesday for an arrhythmic episode for his heart.  My goodness, but that freaked me out!!  He is ok, but wow!  What a week!!  This week I have 3 home inspections so I think we should talk about home inspections soon…what do you think? Anything I haven’t talked about that you are curious about, or would like more information for?  Let me know!  I am, as always, here to help!

***Before we get into this weeks blog, I want to remind you that the Client Appreciation Night is coming up on Saturday, December 6, from 3pm-6pm.  Chris Berg & I know that you have lots of options for lenders and real estate brokers out there.  The fact that you have chosen us to help you is really an honor & a privilege….and one we are grateful for & appreciative of.  We want to say, “thank you”, for choosing us to help you with your home buying (or home selling or refinancing) adventure, and in this regard, twice a year a year we rent a theater room at Cinetopia for client appreciation night.  For this Client Appreciation Night we will be watching Disney’s Big Hero 6!  There is also a ‘rumor’ that a special someone from the North Pole will be joining us.  Please either email me, or Chris Berg at cberg@pcmloan.com with how many tickets you will need so we can get you on the list.  Thank you for your business, your friendship, and your continued referrals!

Now to this weeks blog….This week we are going to talk about what is in your mortgage payment.  Yes, I will talk more about mortgage insurance in a following email.  🙂

Now…on to this weeks topic…  What is in your mortgage payment?

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 $1500, but my principal/insurance portion is only $900 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, these fees must be wrapped into the mortgage payment.   If you don’t have a 20% down payment, 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, 2 young adults, and a pre-schooler), or a couple of Starbucks 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.

Hope this helps. but if you have any questions…you know how to get a hold of me!

Information is power, and I hope that I am help you!  Good luck, and as always…May the odds be ever in your favor out there….  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…. please remember that 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 homebuying 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 homebuying 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…

Next Week:  What is that home worth?  The 4 values you need to know
mortgage insurance…explained
Real estate timelines…time is of the essence.
Last Week:  Title Insurance…explained.

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

Tracie DeMars / Realtor

ReMax Equity Group
License# 81289
Vancouver, WA

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