April 13, 2024
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The Different Parts of a Mortgage Payment

Getting advice from Dustin Dimis a is an important and smart first step when it comes to buying a home. However, other information can be gathered from different sources, too. When it comes to mortgages and mortgage payments, a few various components make up what is paid.

There are several components of a mortgage payment. Knowing what part of the payment goes to each of these parts can help a home buyer better understand when they will be able to pay it off.

The Principal

The term principal is a fancy way to describe the payment amount that goes toward the loan. Every loan payment includes some amount of principal. It is not well understood that the percentage of the payment that goes to the loan’s principal will go up as time passes.

This means it is impossible to divide the principal by the total number of payments and know the amount of the loan paid off. During the early stages of a new loan, a person will not be paying much toward the principal at all. However, it is possible to speak to a lender about adding a little more money to every payment or making an extra payment that can be applied to the principal.


Another important component is the interest applied to the loan. When a loan is issued, a person will pay more for the loan. However, this amount will eventually taper off. The total amount of interest someone pays will depend on the loan’s terms. A shorter loan will usually come with higher interest rates. Other factors can impact the interest rate, including a person’s credit score and the amount of the loan. It is a good idea to take time to improve a person’s credit rating before acquiring the loan.

It is possible to negotiate a loan to get a better interest rate, including considering how long someone will live in the home. Be sure to work out when the interest is going to be paid off.


Property taxes are regulated by the jurisdictions and used to fund various public services. The lender may collect property taxes as a part of the payment and then keep them in escrow until the year ends. This offers a few advantages. For example, a home buyer is not facing a huge bill at the end of the year, and if the total tax amount is not what’s expected, a lender will usually cover the difference and then bill the buyer for it in the future mortgage payments. It will also help a property owner avoid the possibility of a property tax lien, which benefits the buyer and lender.

When it comes to a mortgage, knowing the different parts of the payment will pay off. This will ensure a person knows what they are expected to pay and what parts of their payment will go to the different components. With this in mind, it is possible to make the right decision when it comes to accepting a mortgage loan.