If you are thinking of buying a home or if you’ve already bought one, it’s important to understand your mortgage payment and everything that’s included in it. If you’ve ever felt confused looking at your mortgage statement, wondering what exactly you’re paying for, you’re not alone. At Edge Mortgage Inc., our goal is to help clarify all the areas of buying a home and empower our clients with knowledge. The last thing you want is to get stuck in a payment that you don’t understand anything about. Our priority is to help you feel more confident and informed about your home financing. We also help our clients by removing costly and difficult home-buying processes and replacing them with high-quality customer service. We guarantee honest answers and have no hidden or extra fees to keep more money in your pocket. Edge Mortgage Inc. serves all of Colorado, Ohio, Wyoming, and Nebraska. 

There are seven parts of a mortgage. And undoubtedly knowing about each part will help you understand your mortgage payment. Let’s break them all down down in clear terms.

Understand Your Mortgage Payment: 7 Parts

1. The Principal – Your Mortgage’s Backbone

The principal is essentially the bulk of your mortgage. It’s the amount you borrowed to purchase your home. Understanding this is key to grasping the overall structure of your mortgage payment. As you make payments over time, the portion of your payment that goes toward the principal reduces the amount you owe, gradually bringing you closer to owning your home outright.

2. Interest Rates – The Cost of Borrowing

Interest is the cost you pay for borrowing money, and it’s a significant part of your mortgage payment, especially in the early years. Whether you have a fixed-rate or an adjustable-rate mortgage affects how this portion of your payment is calculated and can significantly impact the overall cost of your loan over time. You can learn more about interest rates and how they are determined.

Understand your mortgage payment

3. Property Taxes – A Mandatory Add-On

Property taxes are another critical component of most mortgage payments. These are based on the value of your property and are determined by your local government. In states like Colorado, Nebraska, Iowa, and Wyoming, where Edge Mortgage Inc. operates, these taxes vary but are essential for funding local community needs. If you’d like to know more about the property taxes in your area, you can always give us a call. We’d be happy to walk you through it.

4. Homeowners Insurance – Protecting Your Investment

Homeowners insurance protects your home and property against damage or theft. Lenders require this insurance to safeguard their investment in your property. The cost can vary based on your home’s location, value, and other factors, and it’s usually included in your mortgage payment.

5. Mortgage Insurance – An Extra Layer of Security

If your down payment was less than 20%, you’re likely familiar with mortgage insurance. This insurance protects the lender in case you default on your loan. It’s an additional cost until you’ve built up enough equity in your home.

6. Escrow Accounts – Simplifying Payments

Many mortgage payments include an escrow account, where a portion of your payment is held to pay property taxes and homeowners insurance. This simplifies the process, ensuring these essential bills are paid on time without you having to manage them separately.

7. Additional Fees and Costs

It’s really important to be aware of other fees that can impact your mortgage. These might include Homeowners Association (HOA) fees, closing costs, or loan origination fees. While not part of your regular mortgage payment, they are crucial to consider in the overall cost of your home financing. Loan fees can vary depending on who you’re working with. Don’t be afraid to ask your mortgage broker what their fees are ahead of time.

Edge Mortgage Inc. is your trusted choice to help you understand your mortgage payment

A mortgage payment encompasses various components, each playing a crucial role in your home financing journey. At Edge Mortgage Inc., we believe in empowering our clients with knowledge, therefore giving you the ability to understand your mortgage payment a reality.

Have questions or need a more detailed explanation? Feel free to reach out! We’re here to help you navigate the complexities of your mortgage payment and ensure you make informed decisions about your home financing. Leave a comment or contact us directly. Let’s make understanding your mortgage payment easy and stress-free.

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Read some of our 5-star reviews from our happy clients

“We have used Edge Mortgage, Inc. 3 times. Every time has been fantastic. Keri is honest, dependable and will do anything she can, with her team, to get you the best rates. We have been treated like family every time and will use her services again in the future. Highly Recommend.” -Stephanos

“Keri did an amazing job helping us with our purchase. Not only was she very knowledgeable, she also kept an eye on the market to lock us in on the best deal. As we came closer to deadlines, she would do triple checks to see if anything had changed. We are definitely going to be using Edge when we make another purchase! Update: We went to Keri for our Refi! She was able to get us a great deal and saved us hundreds on our monthly payments.” -Sophia

“Keri is a lady of integrity, this is my 3rd loan she has helped me to get. She is available any time and her answers and concerns are genuine. Like you she doesn’t like last-minute changes, when they happen, she’ll know what the problem is and the solution.” -Robert

Edge Mortgage Inc. is your top-rated Mortgage Broker in Colorado, Ohio, Wyoming, and Nebraska

Edge Mortgage Inc. is located in Johnstown, Colorado, and serves all of Ohio, Colorado, Wyoming, and Nebraska. We offer the loan process made simple and top-notch customer service. We are your trusted Mortgage Lender and the top mortgage specialist in Ohio, and every state we serve! Call us today at 970-744-0000.

You will also want to read Mortgage Terms Explained: A Simple Guide for Homebuyers.

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