 What does my mortgage payment include?
The monthly mortgage payments include usually three separate parts:
- Principal - a payment on the principal of the loan (that is, the amount borrowed);
- Interest - a payment on the interest if the loan;
- Taxes - payments into a special account (called an escrow account) that your lender maintains to pay the property taxes;
- Insurance - payments into an escrow account that your lender maintains to pay the hazard insurance on the property.
These elements are called P.I.T.I. (Principal-Interest-Taxes-Insurance).
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