The primary factors in determining your monthly mortgage payment are the size and terms of the loan. Once those factors are set, you'll be able to determine the monthly payment. A mortgage payment typically consists of four parts known as PITI: Principal, Interest, Taxes and Insurance.
1. Principal - The principal is the actual amount that you borrowed. With each monthly mortgage payment, you will be paying this balance down. Fixed-rate loans are structured so that the amount of principal paid starts out small and increases with each monthly payment. This means that the mortgage payments in the beginning years consist mostly of interest, those payments later on will consist mostly of principal.
2. Interest - Interest is the "cost" of borrowing the money (principal). The interest rate on a mortgage has a direct relationship with the amount you pay each month. A higher interest rate means higher monthly mortgage payments. Therefore, for most home buyers, a higher interest rate reduces the amount they're able to borrow, while a lower interest rate increases that amount.
4. Insurance - Like the real estate taxes, insurance payments are also paid monthly and held in escrow until the bill is due. There are two types of insurance that can be included in your monthly mortgage payments: homeowners insurance and private mortgage insurance (PMI). The first type protects the home and its contents from fire, theft and other disasters. The second type protects the lender in the event the borrower is unable to repay the loan. PMI is mandatory for homeowners who purchase a home with less than a 20% downpayment. The PMI portion can be dropped once the homeowner has at least 20% equity built up in the home.
Before you choose to make the financial investment of purchasing a home at the Lake of the Ozarks, it's important to understand all of the components that go into a mortgage. As your mortgage lender, I am dedicated to working with you every step of the way. I'll discuss financing options, offer competitive interest rates and back it up with the first class service you deserve. For all of your Lake of the Ozarks home loan needs, give me a call at 573-746-7211.
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Sr. Residential Mortgage Lender
NMLS #: 493712
2265 Bagnell Dam Blvd, Suite B
PO Box 1449
Lake Ozark, MO 65049