What does my Mortgage Payment
Include?
Usually, your monthly mortgage payment is made up of four parts:
principal, interest, taxes and insurance (PITI), but it can also
include maintenance expenses, such as condominium homeowners' association
dues. The principal is the actual amount you borrow.
The interest rate is the fee charged to borrow that amount of money
over time. In addition, a monthly amount may be collected and held
in a separate escrow account to cover property taxes, homeowners'
insurance and mortgage insurance.
Your lender uses the money in the escrow account to pay your tax
and insurance bills, as they come due.
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