PRINCIPAL. The beginning loan amount as stated on the loan note and the subsequent balance after each loan payment is made.
INTEREST. The charge for the use (loan) of the money.
TAXES. The county assessor determines the property tax based on the value of your home. Taxes may be impounded, depending on the amount of your down payment (anything less than 20% usually requires an escrow account).
HOMEOWNER’S (HAZARD) INSURANCE. An insurance that covers the loss of the home from specific hazards, such as a fire. An insurance agent provides this type of insurance. The standard policy pays replacement costs minus depreciation based on actual cash value. See an insurance agent with any questions about homeowner’s insurance. This type of insurance may also be impounded in an escrow account with property taxes.
PMI, FHA MIP, VA FUNDING FEE, USDA GUARANTEED FEE. Charges for PMI, an FHA MIP, a VA Funding Fee, or a USDA Guaranteed Fee may be included in your monthly payment depending on your loan type, the amount of your down payment, and the unpaid balance of your loan. Often these fees are included in financing to keep your closing costs lower.
HOMEOWNER’S ASSOCIATION DUES (HOA FEES). If you belong to a homeowner’s association, your monthly dues may make up a portion of your monthly payment.