What's in My Monthly House Payment?
Your house payment is a significant expense each month that is important to fully understand. There are four primary components of this payment that contribute to the total amount.
Brittany Wilson of Integrity Mortgage, our trusted local lender, breaks down the cost for you.
The Four Components of Your Monthly House Payment:
1. Principal & Interest
This component is usually a FIXED number, which means it remains the same for the duration of your loan (typically 15 or 30 years).
2. Homeowner’s Insurance
This is your normal hazard insurance that is required to own a home. Similar to car insurance, it covers you from weather damage, fire, theft, etc. I work with some of the best insurance brokers in Dallas who will shop insurance rates for you to try to get this portion of the payment as low as possible. However, cheaper is not always better. Having good protection of your home is very valuable if or when an incident occurs.
3. Property Taxes
This is the amount you will have to pay to the county in taxes. Property taxes are not fun, but they are required to own a home. This portion of the payment can and will fluctuate over the years of ownership.
4. Mortgage Insurance
On a conventional loan, this is referred to as PMI or Private Mortgage Insurance. This component is required on all loans with less than a 20% down payment. This is an insurance fee that you will pay each month in your mortgage payment. This insurance fee is eliminated once you reach a certain loan-to-value percentage on a conventional loan. The great news is that we have programs at Integrity Mortgage available that can eliminate this portion of the payment, even if you only put 5, 10 or 15% down. I’d be happy to discuss that loan program with anyone who is interested!
Note: If you purchase a home that is in a Homeowner’s Association, you will also have monthly or yearly HOA dues. This is not included in your monthly mortgage payment.