A total monthly mortgage payment is made up of the following items and is referred to as PITI

Principal – This is the money that you borrowed and agreed to pay back. 

Interest – This is the cost of borrowing the principal

Taxes – When you own property, you have to pay property taxes.  They are based on the value of the home.

Insurance – There are two types of insurance that can be part of your mortgage payment.  The first is homeowners insurance.  This is property insurance that covers losses and damages to your home.  The other is mortgage insurance and it is very different from homeowners insurance.  Mortgage insurance protects your mortgage lender in case you fail to make your mortgage payments.  You only have to pay mortgage insurance if you put less than 20% down when you buy your home.  

There are several ways that you can opt for a lower monthly mortgage payment and stay avoid falling behind on your expenses. Below we have listed a few simple ways that you can remain financially stable as a new home buyer.

Refinance your mortgage

• For someone who has great credit, refinancing could be incredibly beneficial in the long run. It could provide you with a lower interest rate and possibly a smaller monthly payment. For more information on how to refinance your mortgage, register for our seminars and find answers to your questions.

Extend your repayment term

• Lower your mortgage payment by extending your term without refinancing. By turning your 15-year mortgage into a 30-year mortgage, you will have extra time to pay it off, meaning that your monthly mortgage payment will decrease drastically.

Consider paying your PMI upfront

• If your down payment was less than 20%, you could potentially pay your private mortgage insurance (PMI) upfront and avoid paying extra on each monthly mortgage payment. It is important to budget for extra expenses such as PMI because if you are unable to afford your 20% down payment, you could still take care of your private mortgage insurance.