Skip to main content
Parry Custom Homes
  • Get Started
    • Showrooms
    • Buying Process
    • FAQs
  • Our Homes
    • Home Designs
    • Included Features
    • Photo Gallery
    • Virtual Tours
  • Where We Build
    • Counties
    • Find a Homesite
  • Why Parry
    • Our Build Process
    • Testimonials
    • Blog
  • Contact
Parry Custom Homes
  • Get Started
    • Showrooms
    • Buying Process
    • FAQs
  • Our Homes
    • Home Designs
    • Included Features
    • Photo Gallery
    • Virtual Tours
  • Where We Build
    • Counties
    • Find a Homesite
  • Why Parry
    • Our Build Process
    • Testimonials
    • Blog
  • Contact
Blog
banner image

Components of a mortgage payment

Posted on October 5, 2018 by Justin

If you are currently shopping for a Pittsburgh custom builder this Fall or are considering a new home in the New Year, you may not be aware of all that makes up your mortgage payment. Many new homebuyers aren’t familiar with the process of getting a mortgage, let alone what goes into the mortgage payment itself. Parry Custom Homes shares an insight on what you can expect your home mortgage to be made up of, so you can be educated in knowing what to expect for your new home.

The importance of understanding the dynamics of what goes into a mortgage payment can help you acquire bigger loans with fewer drawbacks. There are four components that make up your mortgage payment that you will want to be aware of.

The first component of a mortgage payment is the Principal. This is the total value of the loan that you borrow from the lender, minus the interest. At the onset of paying off your mortgage, the principal portion of paying off each monthly fee will be small and eclipsed by the interest portion. However, as time passes and you acquire more equity in your home with each portion of the loan reimbursed, the final stretch of your mortgage term will be largely composed of principal installments.

The second component of your mortgage will be the Interest portion, which is the one most people are aware of the most. The interest will be the expense that the lender charges you for the ability to borrow their loan for your home. The interest rate will directly influence the size of your loan as higher rates turn out smaller loans.

Your credit score will determine what type of interest rate you are offered on a home loan and the better your score, the lower the interest rate that you will be offered. This is why it is critical for people to work on having good credit scores before going to try and purchase a new home.

Your lender, when you choose one, will write up  a loan agreement with the period of time in which you have to pay off the mortgage. Most homebuyers favor 30-year contracts, as their monthly payments are smaller. However, if you are looking for a lower interest rate for your home, consider a 15-year home loan which typically will come with a lower interest rate.

Taxes are the third component that will make up your home loan. The taxes in our mortgage payment will refer to the property taxes that are typically gauged by local or municipal governing bodies based upon the value of the real estate in your area. You can pay your taxes through your loan office by setting up an escrow account. Each month the lender collects funds from your periodic mortgage payments to put into escrow. This will remain untouched until taxes are due. The portion of your monthly mortgage payment that is appointed to tax obligations equals one-twelfth of the yearly tax amount.

Lastly, Insurance will be the final pillar that makes up the four components of your mortgage payment. The insurance portion of your mortgage will cover your property insurance and private mortgage insurance. One way to cut down on your monthly payment some if you are able too, is to pay off your PMI up front when you sign for your home. This will cut out having to pay it off over time within the loan.

Knowing what comprises your mortgage payment will help you not only better understand where your money is going too each  month, but also ensure you get the best deal you can on your mortgage.

 

 

Parry Custom Homes is an established homebuilder in the Pittsburgh area.  Call or contact us today for more information.

Share on:
  • Facebook
  • Twitter
  • LinkedIn

Categories

  • All Posts
  • Buying a Home
  • Custom Home Builders in Pittsburgh
  • Custom Home in Pittsburgh
  • Custom Home Plans
  • Custom Homebuilder
  • Homeowner News
  • Homeowner Testimonials
  • Homeowner Tips
  • New Homes in Pittsburgh
  • On your lot builder Pittsburg
  • On Your Lot Builder Pittsburgh
  • Pittsburgh Communities
  • Pittsburgh custom homebuilders
  • Pittsburgh custom homes
  • Pittsburgh Events
  • Pittsburgh Home Builder
  • Pittsburgh home builders
  • Pittsburgh New Home Builder
  • Pittsburgh on your lot builder
  • Uncategorized

Archives

Tags

  • Pittsburgh custom homes
  • On Your Lot Builder Pittsburgh
  • Pittsburgh new home builder
  • pittsburgh on your lot builder
  • new homes in pittsburgh
  • Pittsburgh custom homebuilders
  • Pittsburgh new homes
  • new home in Pittsburgh
  • new homes pittsburgh
  • pittsburgh home builders
  • Parry Homes
  • pittsburgh custom home builders
  • Pittsburgh home builder
  • custom home builders in pittsburgh pa
  • home solutions
  • custom homes pittsburgh
  • homeowner tips
  • homebuying
  • The Parry Experience
  • pennsylvania custom home builders
  • interior design
  • Parry Custom Homes
  • winter home tips
  • homebuyer tips
  • seasonal decorating
  • home finance
  • Pittsburgh custom home
  • kid room decor
  • Custom Home in Pittsburgh
  • homes for sale in north huntingdon
  • Mountain Ridge Estates
  • Pittsburgh on your lot builer
  • North Huntingdon community
  • Shannon Mills community
  • Pittsburgh on your lot builde
  • Parry Custom
  • home for sale in Pittsburgh
  • home selling
  • kitchen cabinets
  • events in Pittsburgh
  • custom floor plans
  • selling old home
  • kid room design
  • home memories
  • pittsburgh new
  • On your lot builder Pittsburg
Contact Us
10349 State Route 30

N. Huntingdon, PA 15642
PH:(724) 863-0199
Email Us
Visit our Showrooms!

Call to Schedule an Appointment

  • Standard Features
  • Our Homes
  • Locations
  • Photo Gallery
  • Virtual Tours
Irwin Showroom
10349 State Route 30
N. Huntingdon, PA 15642
Phone: (724) 863-0199
Washington Showroom
34 Foundry Way (Old Mill Blvd)
Washington, PA 15301
Cranberry Showroom
20325 Route 19, Unit 9
Cranberry Township, PA 16066
Morgantown Showroom
143 Target Way
Morgantown, WV 26501
Phone: (304) 378-4554
Follow Us
  • Facebook
  • YouTube
Website by Imagebox
© 2022 Parry Custom Homes
All rights reserved.