Your Mortgage Payment

Do you know where your dollars go? You may be surprised to know that your mortgage payment doesn’t just pay your mortgage — other components are wrapped in as well.

PITI – the term for Principal, Interest, Taxes and Insurance – is what makes up your total monthly mortgage payment.

Principal and interest payment (P&I) – This portion of your payment goes toward amortizing (paying off) the loan amount (principal), along with the interest over the term of the loan.

Property taxes (T) – Real estate taxes are escrowed by most lenders, as unpaid and past due taxes must be paid before any mortgage amount. The taxes go toward county expenses.

Homeowner’s insurance premium (I) – Homeowner’s insurance covers the home in the event that a loss occurs. Although you can select the insurance provider, you must pay the policy before closing on the home. The lender holds the insurance portion of your monthly mortgage payment for an entire year, then pays the bill for you. Keep in mind that you’ll be paying this year for next year’s policy.

Private Mortgage Insurance (MIP or PMI) – This insurance covers the lender in the event that you default on your loan and the property is foreclosed on. MIP/PMI applies to properties with a loan-to-value ratio (LTV) of over 80%. So, if you make a down payment of 20% or more, PMI is not required.

What People Are Saying:

“Allen knew all of the different builders and lenders. We found a program that was designed exactly for my situation. My payment was what I expected and there were no hidden costs. There is no question that Allen saved me plenty of time and money. My brother bought two homes from him as well.”

Yousef Barham, Fishers, IN

Indy Fine Homes