💰 What’s Actually Included in a Mortgage Payment?

Wondering where your monthly mortgage dollars actually go? This quick mortgage payment breakdown explains the four key parts—and how to budget smartly as a homeowner.

💡 The 4 Parts of a Mortgage Payment

Every mortgage payment feels like a single chunk—but behind the scenes, it’s made up of four key components. Here’s a simple mortgage payment breakdown you can actually understand.

1.

Principal

This is the part that actually reduces your loan balance. If you borrowed $200,000, every dollar toward principal chips away at that amount.

2.

Interest

This is what the lender earns for letting you borrow the money. Early in your loan, interest takes up a larger portion of your mortgage payment. That’s why early payments can feel like they’re not making a dent!

3.

Taxes

Your local property taxes are often bundled into your monthly payment. The lender holds them in escrow and pays the city or county on your behalf.

4.

Insurance

This usually includes homeowner’s insurance (required by lenders) and possibly private mortgage insurance (PMI) if you put less than 20% down.

🔍 Quick Math Example

Let’s say your mortgage payment is $1,800/month. It might break down like this:

• $700 principal

• $500 interest

• $400 property taxes

• $200 insurance

Everyone’s numbers are different, but this basic structure is standard across most loans.

🧠 Final Thought:

Understanding your mortgage payment breakdown helps you budget, plan ahead, and even spot ways to save (like refinancing or challenging your property tax assessment).

📞 Have questions about your mortgage or buying a home in Northeast Ohio? Contact The Stone Team today—we make real estate make sense.