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What are the components of a monthly payment? |
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Your Monthly payment is the sum of four factors, commonly
referred to as PITI (Principal, Interest, Taxes, Insurance). You may also be
required to pay a monthly Private Mortgage Insurance premium (PMI).
Principal - The amount of the payment that
is applied to the Loan balance
Interest - The charge paid for borrowing
money.
Taxes - Property taxes. May also be paid
separately to your local government.
Insurance - Lenders require you to maintain
adequate insurance to protect your home. This may also be paid separately.
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