Real Estate

What’s In A Mortgage? Breaking Down the Components of A Mortgage Payment

In simplest terms, a mortgage is a long-term loan designed to help borrowers purchase a house. It allows individuals to become homeowners without making a large down payment and thus, fulfilling The American Dream. Once you become a homeowner, a mortgage represents one of your life’s biggest financial commitments. So it’s important to understand the structure of your payments — what percentage goes to principal, interest, and taxes, and what you currently owe on your loan balance.

I’m a first-time home buyer. Once I closed on my new home, when will my mortgage payment start? Mortgage payments usually start one full month after the last day of the month in which the home purchased closed. Unlike rent payments, which are usually paid in advance on the first day of the month, mortgage payments are paid in arrears. It means the payment is expected to be made at the end of the month. For an instance, after closing on your new home on March 28, the first full mortgage payment, which is for the month of April, is then due on May 1. 2 primary factors to determine your monthly mortgage paymentsSize of the loan – refers to the amount of money borrowed.Term of the loan – the length of time within which the loan must be fully paid back.Remember: Longer terms result in smaller monthly payments. This is why the 30-year mortgage remains the most popular mortgage financing option among many home buyers.  Remember PITI: The 4 Major Components of a Mortgage Payment PRINCIPALThe actual amount of money you borrowed from the lender without the interest. It is the face value of your mortgage on the first day. For an instance, if your mortgage is $250,000 with a 4.5% interest rate, your principal remains at $250,000.A portion of each mortgage payment goes to the repayment of the principal. If you take a mortgage with a fixed-interest rate, your principal repayment will be the same for the life of the loan. A greater amount of the principal is paid during the back half of the loan because the majority of the payment in the first few years goes primarily to interest.To calculate your starting principal balance:Principal Balance = Purchase Price + Fees Rolled into Mortgage – Down payment INTEREST The interest is another big part of your mortgage payment. It is basically the profit that goes to the lender. Think of it as the lender’s reward for taking a risk and lending money to a borrower. Lenders will want to earn their interest back in the first few years of the loan repayment before they start reducing principal. Meaning, the majority of your mortgage payment goes to the interest in those first few years, but every month you pay down a little bit of principal as well. This is the method banks use to protect themselves in the event of a default. But the more payments you make, the lesser amounts goto interest and a bit more goes to the principal. For a 30-year loan, the first seven years will go mostly towards the interest.   Higher interest rates = higher mortgage paymentsInterest is accrued annually regardless of whether you have a fixed-rate mortgage or an adjustable-rate mortgage. It’s important to note that the interest rate on a mortgage has a direct impact on the size of a mortgage payment. The average 30-year fixed-mortgage rate until March this year is 4.54%, which rose slightly higher since November 2017.To calculate how much of your payment goes to interest:Interest Portion = Current Principal Balance 𝒙 (APR ÷ 12) Side Note: What is amortization?Amortization is a sliding scale that shows how much of your monthly mortgage payment is going towards principal and how much is going towards interest. It also includes a breakdown of every payment for whatever term you select. To have an idea of where your monthly payment typically goes, visit your lender’s website and print off a copy of your amortization schedule. There are also free amortization schedule calculators online that you can use as a guide to estimate the monthly payment on your mortgage. TAXES Almost all lenders require you to include, or escrow, the taxes into your monthly payment. It is because property taxes take first priority over everything else. The tax portion of your payment could vary from year to year depending on the town where you live and your property’s value. Real estate taxes are assessed by governmental agencies and used to fund various public services, including the school district, road construction, the police and fire department services, and others.  The amount that is due in taxes is divided by the total number of monthly mortgage payments in each year. If you escrow, you place the next tax payment in advance with your lender and they pay the taxes for you. If you have an extra amount in your escrow account at the end of the year, your lender may cut you a check and then simply roll it over to next year. INSURANCEInsurance payments, just like property taxes, are also part of each mortgage payment and held in escrow until the bill is due. This is done to ensure that you are always covered in the event of an emergency. The taxes and insurance typically don’t experience much fluctuation, unless there is a run on foreclosures or if your neighborhood was hit by weather issues, then it could change significantly. Common Types Of Mortgage Insurance Included in Mortgage Payments Private Mortgage Insurance (PMI)This type of insurance is mandatory for homeowners who purchased a home with a down payment of less than 20% percent of the home’s purchase price. It protects the lender from financial loss in the event that a borrower defaults on the loan. The rates for PMI differ from loan to loan and depends on several factors, including the borrower’s credit and the amount of down payment. Typically, this insurance costs between 0.3% to 1.15% of the mortgage loan amount.For most conventional loans, the payment for PMI is necessary until you have at least 20 percent equity in your property. A borrower also has the option to choose from different payment plans: annual, monthly, and upfront payment. Homeowner’s InsuranceThis is a form of property insurance that covers losses and damages to an individual’s house and assets in the home. It also provides liability coverage against accidents in the home or on the property. Homeowner’s insurance is often bundled with mortgage payments. It’s important that homeowners educate themselves on the amount of their homeowner’s insurance premium every month. Mortgage Insurance Premium (MIP) in FHA LoansThe MIP is an insurance policy used in FHA Loans. It protects lenders against losses that result from defaults on home mortgages. In an FHA loan, both upfront and annual mortgage insurance are required for all borrowers, regardless of the amount of down payment. Borrowers can check the annual MIP rates on the FHA website.

What’s In A Mortgage? Breaking Down the Components of A Mortgage Payment Read More »

January 2025 Broward County Single Family Homes Real Estate Market Update

Stay informed with the latest insights into the Broward County real estate
market for January 2025. Discover trends in single-family home sales,
median prices, and inventory levels. Whether you’re buying or selling,
Scott Lehr PA at RESF and The Listing Team provide expert analysis to help
you navigate the South Florida housing market.

January 2025 Broward County Single Family Homes Real Estate Market Update Read More »

Broward County Condo Market Report – January 2025: A Buyer’s Market Emerges

Broward County Condo Market Report – January 2025 | South Florida Real Estate Trends

Broward County Condo Market Report – January 2025: A Buyer’s Market Emerges

Introduction: Broward County Condo Market OverviewThe Broward County real estate market is shifting in January 2025, presenting new opportunities for buyers and sellers alike. With rising inventory, declining home prices, and an increase in market time, this month’s report signals a strong buyer’s market.Whether you’re looking to buy a condo in Broward County, sell your property, or invest in South Florida real estate, understanding the latest Broward County condo trends will help you make informed decisions.Active Listings & Median List Price in Broward County

As of January 2025, the median list price for condos in Broward County is $281,000, reflecting a 0.4% month-over-month decrease.📊 Key Trends:Condo prices peaked in mid-2022 and have been steadily adjusting.Sellers are now facing increased competition with rising inventory.Buyers can negotiate better deals, given the cooling price trends.Looking for the latest condo listings in Broward County? Search active condo listings here.Market Trends: Is Broward County Now a Buyer’s Market?

This month’s report clearly shows a shift in market dynamics. The months of inventory has surged to 9.92 months, up 67.3% from last year.📈 What This Means:✔️ Buyers: More choices, more negotiating power, and price flexibility.✔️ Sellers: Competitive pricing and marketing strategies are crucial to attract buyers.✔️ Investors: The increasing inventory could present real estate investment opportunities in Broward County.Thinking about selling your condo in Broward County? Get a free home valuation now.Median Property Value & Long-Term Trends

The median estimated condo value in Broward County stands at $294,110, reflecting a 0.2% decline from last monthand 1.8% decline year-over-year.This trend suggests that the market is correcting from previous highs, making it a great time for buyers to enter the market before interest rates change.If you’re wondering how much your condo is worth in today’s market, get an instant condo valuation.Inventory Levels & New Listings in Broward County

📦 The months’ supply of inventory has reached 9.92 months, reflecting a significant increase of 67.3% from last year.New listings are coming onto the market at a median list price of $285,000, which is a 1.7% month-over-month decline. This indicates that sellers are adjusting expectations and becoming more flexible in pricing.🏡 Need help pricing your condo for a fast sale? Request a professional market analysis.Pending & Sold Listings: What’s Moving in the Market?

Pending Listings: The median list price of pending condos is $275,000, up 6.2% from last month.Sold Listings: The median sold price in Broward County is $270,000, reflecting a 5.3% month-over-month decrease.Public Records Sales: Transactions show a median sold price of $275,000, indicating buyers are still willing to pay for well-priced properties.If you’re considering buying a condo in Broward County, now is the time to explore affordable condo listings.What This Means for Buyers & Sellers in Broward County✅ Buyers: Increased inventory and slight price declines mean better deals and more options.✅ Sellers: Proper pricing and marketing strategies will be essential to attract buyers in this high-inventory market.✅ Investors: The South Florida real estate market is stabilizing, and with rising inventory, this could be an excellent time to invest in rental properties or fixer-uppers.Get Expert Advice for Buying or Selling in Broward CountyNavigating a buyer’s market requires expert insight. Whether you’re buying, selling, or investing, I can help you make the right move in this evolving market.📞 Contact Scott Lehr at 786-977-8542 for a personalized market analysis and expert guidance.For more updates on Broward County real estate trends, South Florida home values, and expert insights, visit www.reallistingagent.com.🚀 Stay ahead in the market – Let’s talk real estate today!

Broward County Condo Market Report – January 2025: A Buyer’s Market Emerges Read More »