- What is included in a monthly mortgage payment?
- A standard mortgage payment consists of PITI: Principal (reducing your loan balance), Interest (the lender’s fee), Taxes (municipal property tax held in escrow), and Insurance (homeowners hazard insurance and Private Mortgage Insurance if down payment is below 20%).
- How does down payment size affect my monthly payment?
- A larger down payment reduces the borrowed principal amount, lowers your monthly principal and interest payment, reduces total lifetime interest, and eliminates Private Mortgage Insurance (PMI) once your loan-to-value (LTV) ratio drops below 80%.
- Should I choose a 15-year or 30-year mortgage?
- A 30-year mortgage offers lower, more manageable monthly payments, giving you budget flexibility. A 15-year mortgage has higher monthly payments but generally offers lower interest rates and saves tens of thousands in lifetime interest.