When it comes to getting a mortgage, there is usually going to be more than just the amount you pay back to the bank on the bill each month. Here are some of the basic components of an average mortgage payment if you’re purchasing a condo in Beacon Hill, Back Bay, Seaport District or for that matter any where in Boston.
This is the actual amount a borrower gets from the bank for the Boston condo. Early in the life of the loan, little of the payment will go toward paying back the principal. The amount of principal paid each month will go up over time as the borrower pays back the loan.
This part of a mortgage payment goes to the bank for the privilege of borrowing. Interest payments can be fixed or variable. The amount of interest paid is inverse to the amount of principal that gets paid back over time, as the interest is calculated on the amount of principal that’s still outstanding.
Private Mortgage Insurance (PMI)
PMI is an expense that not every property buyer will pay, but many lenders require this form of insurance. Only borrowers who had a down payment of less than 20 percent will have to pay for PMI, whereas those who put down more than this amount will avoid paying PMI altogether.
Most banks require borrowers to purchase a homeowners insurance policy. This form of insurance will protect both borrowers and lenders from fires and other common hazards that can destroy a property. In the event of a loss, owners of Boston Beacon Hill condos will only have to pay their deductible.
With few exceptions, just about anyone who purchases a condo or loft will have to pay taxes to the local jurisdiction. These taxes are generally based on the value of the property and go to support local schools, police, fire departments, and other assorted services.
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