How to Find the Real Cost of Monthly Payments

Maybe you've run a mortgage calculator to determine the payment on your dream home, and it seems reasonable. However potential homeowners need to understand the real cost of purchasing a home before they sign the mortgage documents. There are several itemized charges that add to a monthly total payment which should be considered; Reliance First Capital brings you a few examples of what they are.

Principal: Don’t suffer sticker shock when you see that you’ve only paid off a tiny fraction of your loan after a year of monthly payments. When you take out a fixed-interest loan for a specified term, your basic monthly payment will stay the same for the life of the loan. However, that payment includes both the amount going to the loan total (or principal) and the interest. At the beginning of the loan the majority of the payment will be going to interest. As time goes on and the principal gets paid down, more of the payment will go toward principal.

Interest: Your basic loan payment will always include both principal and interest, but interest is applied in different ways. The most common loan structures offer either fixed or adjustable interest rates:

Taxes: You will also pay property taxes (for city, county, state, and school district) in monthly increments through your mortgage payments. A part of each month’s payment goes into an escrow account held by the lender, which then pays the taxes when they become due.

It’s critical to understand all of the elements of your total payment before closing on your house. At Reliance First Capital, we take special care to help our customers determine which loan is right for them, and help them decide how much debt burden they can and should take on based on their real monthly payment.

Reliance First Capital can find the loan option to meet your unique lifestyle and financial goals. Learn more about Reliance First Capital by contacting us at 866-735-9004 or visiting us online at www.reliancefirstcapital.com.