![]() You may choose to pay for each expense separately, or roll these costs into your monthly mortgage payment so you only have to worry about one payment every month. Other types of mortgages usually come with their own types of mortgage insurance and sets of rules. Keep in mind, PMI only applies to conventional mortgages, or what you probably think of as a regular mortgage. PMI can cost between 0.2% and 2% of your loan principal per year. Many lenders require PMI if your down payment is less than 20% of the home value. Mortgage insurance: Private mortgage insurance (PMI) is a type of insurance that protects your lender should you stop making payments.The average annual premium 2020 was $1,311, according to the most recent data from the Insurance Information Institute. Homeowners insurance: This insurance covers you financially should something unexpected happen to your home, such as a robbery or tornado.You may end up paying hundreds toward taxes each month if you live in an expensive area. Property taxes: The amount you pay in property taxes depends on two things: the assessed value of your home and your mill levy, which varies depending on where you live.You may face any or all of the following expenses: But you'll also have to make other payments toward your home each month. Together, your mortgage principal and interest rate make up your monthly payment. The principal and interest will be rolled into one monthly payment to your lender, so you don't have to worry about remembering to make two payments. Maybe your principal is $250,000, and your interest rate is 3% annual percentage yield (APY).Īlong with your principal, you'll also pay money toward your interest each month. You'll also pay interest, which is what the lender charges you for letting you borrow money. Your mortgage principal isn't the only thing that makes up your monthly mortgage payment.
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