The interest rate on your mortgage grabs the headlines, but it is the total monthly payment that decides whether you sleep easy or stretch every paycheck. In 20 years as a loan officer and branch manager, I have watched several clients look at rates instead of how much they will pay per month.
Why the Interest Rate Is Only Half the Story
The interest rate is easy to compare, which is exactly why lenders advertise it so loudly. But the rate only determines the principal and interest portion of your payment. Everything else you pay each month — property taxes, homeowners insurance, and sometimes mortgage insurance — has nothing to do with that headline number.
Breaking Down the Monthly Payment
Your full mortgage payment is four pieces, often called PITI — principal, interest, taxes, and insurance. Only the first two come from your rate. Taxes and homeowners insurance are set by your home's value and your policy, held in escrow and paid for you. That is why two buyers with the same rate can have very different monthly bills.
Finding Your Comfort Zone
After 20 years in the finance, my advice is simple: qualify for a payment, not a percentage. Get the facts to show the full monthly number — principal, interest, taxes, insurance — and compare it against your real budget.
Brian Bamman
NMLS ID # 265635
Branch Manager | Geneva Financial, LLC
O: 575-578-2007| M: 575-500-2167
E: BBamman@Genevafi.com | www.BammanTeam.com
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