What does my mortgage cover?

What does my mortgage cover?

Most loans cover the following:

Principal: The repayment of the amount you borrowed from the bank or lending institution.

Interest: Payment to the lender for the money you’ve borrowed.

Homeowners insurance: A monthly amount to insure the property against loss from
fire, smoke, theft, and other hazards required by most lenders.

Property taxes: The annual city/county taxes assessed on your property,
divided by the number of mortgage payments you make in a year. Most loans are amortized for
30 years, although 15 year loans are available, as well as 10 and 5 year loans,
which are rare now. During the life of the loan, you’ll pay far more in interest than you
will in principal – sometimes two or three times more! Because of the way loans are structured,
in the first years you’ll be paying mostly interest in your monthly payments. In the final years,
you’ll be paying mostly principal.