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Disclaimer
- Answer: Most loans have 4 parts: principal: the repayment of the
amount you actually borrowed; 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; and 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 for 30 years, although 15 year loans are available,
too. 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.
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