Mortgage Basics: Costs
People generally think about a mortgage in terms of the monthly payment. While that payment represents the amount of money needed each month to cover the debt on the property, the payment itself is actually made up of a series of underlying expenses. The down payment and closing costs must also be taken into consideration.
Regardless of whether a mortgage is based on a fixed-rate loan or a variable-rate loan, the series of underlying components that combine to equal the amount of the monthly payment typically includes both principal and interest. Principal simply refers to the amount of money originally borrowed. Interest is a fee charged to the borrower for the privilege of borrowing money… Read More