COMMUNITIES MATTER:

Your mortgage payment typically consists of the following components, often referred to as PITI:

• Principal: This is the portion of your payment that goes towards reducing the original loan amount.
• Interest: This is the cost of borrowing money, calculated as a percentage of the remaining loan balance.
• Taxes: Property taxes that are paid to your local government. These are often collected by your lender and held in an escrow account.
• Insurance: Homeowners insurance, which protects your property from various risks, such as fire or theft. This is also often included in your escrow account.

Choosing the right mortgage depends on your financial situation, goals, and risk tolerance. Fixed-rate mortgages offer consistent payments over time, making budgeting easier. Adjustable-rate mortgages (ARMs) might start with lower rates but can adjust over time. To determine the best fit, consider your long-term plans, how long you intend to stay in the home, and your comfort level with potential rate changes.

A fixed-rate loan maintains the same interest rate and monthly payment throughout the life of the loan. This offers stability but might have a higher initial rate. An adjustable-rate loan starts with a fixed rate for a set period, then adjusts periodically based on an index. Initial rates are often lower, but future adjustments can lead to rate increases.